Agricultural Productivity Growth in Central America and the Caribbean

This thesis estimates total factor productivity (TFP) growth in the agricultural sector of fourteen regions in Central America and the Caribbean. First, TFP is measured parametrically and non-parametrically, using the Ordinary Least Square (OLS) method and the Maximum Likelihood (ML) method to estimate a translog production function and the Malmquist index approach. Secondly, the thesis incorporates an environmental bad, CO2 emissions from expansion of agricultural land by sacrificing forest area and estimates environmentally adjusted productivity (EAP) growth rates using an output distance function in order to assess how the growth of TFP rates changes when such a bad is included in the production function. The average TFP growth rates of the regions have increased over the period of 1976 to 2006. Belize, Costa Rica, Cuba, Honduras and Panama score the highest growth rates while the Dominican Republic, Haiti, and Trinidad&Tobago show slower, and in some specifications, negative TFP growth rates. When the implication of CO2 emissions from land use change was tested, the trend of EAP evolution declined between 1992 and 2006. According to this result, Haiti is no longer a major concern while Puerto Rico is the worst performer of all.