MEASUREMENT OF TECHNOLOGICAL CHANGE BIASES AND FACTOR SUBSTITUTIONS FOR MALAYSIAN RICE FARMING

Abstract

Due to a full-fledged initiation of irrigation facilities into all of Malaysia's major designated paddy areas in the late 1970s, the rice farming sector has undergone rapid transformation. In particular, double-cropping has become possible. However, never in the past have studies been undertaken to explicitly incorporate, and thus, investigate this recent phenomenon by means of a macro-type, and time series of cross-section data. Using a translog cost function approach, and by incorporating the seasonal and proximity factors into the analysis, the present paper empirically investigates the production structures underlying Malaysian rice farming for the period 1980-90. The results, though, seem to support Hicks' induced-innovation hypothesis and to some extent, the criticism against the Green Revolution. Perhaps, the method employed here could also be applied to investigate other countries' production structures whose rice farming sector shares similar characteristics to that of Malaysia.

JEL classification: C23, D24, O39

Key words: Production structures, Technological change, Factor substitutions