Management Theory and Studies for Rural Business and Infrastructure Development, Volume 33

Decomposition of the total factor productivity in lithuanian family farms by the means of the hicks-moorsteen index

Tomas Baležentis

Abstract

This study employs the Hicks-Moorsteen total factor productivity index and data envelopment analysis to measure total factor productivity changes in Lithuanian family farms. Furthermore, these changes are decomposed into separate effects. The aim of the paper is to identify the prospective guidelines for a reasonable agricultural policy and scientific research aimed at increasing productivity of the Lithuanian family farms. The paper discusses the peculiarities of the distance functions, presents the concept of the Hicks-Moorsteen TFP index, and assesses the TFP changes in Lithuanian family farms by the means of the Hicks-Moorsteen TFP index. The research covers the period of 2004–2009 and is based on micro data. The mean increase of TFP reached some 20% in the analyzed sample of the Lithuanian family farms throughout 2004–2009. It turned out that the crop farms experienced the highest TFP decrease in terms of efficiency effect. Therefore the latter farms should implement certain technological measures. The livestock farms exhibited rather high values of efficiency and technical effects, albeit activity effect was relatively low.

JEL codes: C430, C440, C610, Q100, Q120.

Keyword(s): total factor productivity, efficiency, Hicks-Moorsteen index, data envelopment analysis, family farms


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Management Theory and Studies for Rural Business and Infrastructure Development eISSN 2345-0355

This journal is published under the terms of the Creative Commons Attribution-Noncommercial 3.0 Unported License. Responsible editor: Dr Audrius Gargasas.