AN ANALYSIS OF PRODUCTIVITY GROWTH AND RATE OF RETURN TO RESEARCH IN AGRICULTURE SECTOR OF NORTH WEST FRONTIER PROVINCE

Using Tornqvist-Theil Index, average annual total factor productivity (TFP) growth rate of all major and minor crops in NWFP is found to be 1.5 percent, during 1969-2004. The marginal internal rate of return to provincial investment in research for TFP growth was in the range of 34 to 42 percent over the same period. Almon distributed lag model has also been estimated, using three different lags structures based on a Cobb-Douglas production function specification. Inputs in this production function include irrigated/cultivated area, number of tractors, road kilometers, labor, village electrified and fertilizers. First three inputs are found to have statistically significant impacts in all three estimates of the production function. Some policy implications of the results are also discussed