Technological Innovations, Downside Risk, and the Modernization of Agriculture

We use a randomized experiment in India to show that improved technology enhances agricultural productivity by crowding in modern inputs and cultivation practices. Specifically, we show that a new rice variety that reduces downside risk by providing flood tolerance has positive effects on adoption o...

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Bibliographic Details
Published in:The American economic review 2016-06, Vol.106 (6), p.1537-1561
Main Authors: Emerick, Kyle, de Janvry, Alain, Sadoulet, Elisabeth, Dar, Manzoor H.
Format: Article
Language:English
Subjects:
Agricultural economics
Agricultural production
Agriculture
Fertilizers
Innovations
Seeds
Shorter Papers
Studies
Technological change
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Summary:We use a randomized experiment in India to show that improved technology enhances agricultural productivity by crowding in modern inputs and cultivation practices. Specifically, we show that a new rice variety that reduces downside risk by providing flood tolerance has positive effects on adoption of a more labor-intensive planting method, area cultivated, fertilizer usage, and credit utilization. We find that a large share of the expected gains from the technology comes from crowding in of other investments. Therefore, improved technologies that reduce risk by protecting production in bad years have the potential to increase agricultural productivity in normal years.
ISSN:0002-8282
1944-7981
DOI:10.1257/aer.20150474