Measuring technological change in agriculture: an application based on the ces production function

Abstract

The purpose of this study is to analyse and measure the technological change that has occurred in agriculture. The study is primarily methodological with the focus on development of a method for measuring technological change and on testing this method. The study is divided into a theoretical and an empirical part. The most common methods for measuring technological change are examined in the theoretical part of the study together with the concepts connected with a technological change and its characteristics. The empirical part tests the applicability of the measuring method based on the CES function for estimating the parameters of technological change in agriculture. To a great extent the parameter estimates calculated conform with what was anticipated. Technological change will continue to be a very important source of productivity growth. By adapting to new technology our small farms can develop very fast in terms of structure and productivity. It appears that technological development will continue to proceed along the lines described in this study in the near future. Technological change can be expected to be capital-using and labour-saving. It will also have a considerable influence on increasing output, especially in cattle husbandry.