Technical efficiency and total factor productivity of agriculture of South American countries: an analysis of the member states and non members of Mercosur

Abstract

This paper analyzes the Total Factor Productivity (FTP) and the evolution of technical efficiency of agricultural products to the countries of South America in the period 1991 to 2010 coincided well with the formation of MERCOSUR (Southern Common Market). There is also the formation of this economic bloc contributes to that member countries have higher overall productivity levels of the factors as a result of trade liberalization, rather than with countries that are not part of the agreement. For this, we estimated the Stochastic Frontier Production and then calculated the Malmquist index, which captures the decomposition of total factor productivity. The results showed that the formation of the free trade area was not enough for this group of countries obtain higher performance for countries not members of MERCOSUR. It is noteworthy also that Brazil was the only country to achieve productivity gains, 7.13%. Keywords: Total Factor Productivity. Mercosur. Malmquist Index.