A review of Yuanchun Chen, "A Comparative Study of Total Factor Productivity of Soybeans in China and the United States"
A review of Yuanchun Chen, ‘A Comparative Study of Total Factor Productivity of Soybeans in China and the United States??????????????’ [1], Journal of China Market(??????), 2020, no.8, pp.12-14. This article is published in Chinese.
This article compares the total factor productivity (TFP) growth rates of soybeans in China and the United States, aiming to identify the causes of the low TFP of soybeans in China and provide solutions. At the beginning, Chen reviews the literature on agricultural TFP in China, pointing out the gaps in the current research on soybean TFP in Chinese academia and the confusion between the concepts of "total factor productivity" and "total factor productivity growth rate". Then, the author selects data from 1978-2016 in China and 1999-2015 in the United States and used the Solow residual method (SR) to measure the total factor productivity growth rate of soybeans in both countries, and then processes an empirical analysis.
The results show that TFPG in China is negative in most years, except for the growth due to the increase in farmers' incentive during the early years of reform and opening up. The author explains that this is because the introduction of the minimum purchase price in China later dampened farmers' enthusiasm for planting and the soybean acreage shrank significantly, thus appearing a negative TFPG value. The U.S. TFPG, on the other hand, exhibits alternating positive and negative fluctuations, and Chen argues that the frequency with which U.S. farmers renew their fixed assets explains this variation. For different reasons the soybean industry in both China and the U.S. is characterized by diminishing returns to scale. For China, it is because of a labor surplus, and for the U.S., it is because the scale of operations has exceeded the optimal scale with current technologies. Through the comparison, the author concludes that there are three major preconditions to make up for China's shortcomings. The first is to focus on the soybean industry in policy, the second is to increase capital investment and fixed asset renewal, and the third is to enhance training for agricultural producers.
Besides technology and scale effects, Chen adds several factors that influence labor productivity, such as differences in natural conditions and the influence of social perceptions on people.
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