SAJMS - South Asian Journal of Management Sciences

Determinants of agricultural production: A Cross-country Sensitivity analysis

The relative importance of the key determinants of agricultural-production by performing sensitivity analysis on a cross country data set of 81 countries has been investigated. For analyzing the significance of regional differences in agricultural production, two dummy variables were used for high and low income countries. The World Bank data set is used for this study ranging from 2002 to 2013 and cross-country regression coefficients are estimated through the ordinary least square method. The study finds the role of land, physical capital, human capital and fertilizer as positive and statistically significant in agricultural-production. The study further finds that physical-capital contributes more consistently than human capital does in agri-production. However, the presence of physical-capital in agricultural-production leads to the creation of a disguised unemployment in the agricultural sector, which should be channelized in order to attain maximum production. The regional dummies for low and high-income countries are found to be statistically significant. The results show that agriculture production, given the inputs, is higher in high-income countries and lower in low income countries.

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