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Technology Adoption in the Presence of Constraints: the Case of Fertilizer Demand in Ethiopia
Author(s) -
Croppenstedt Andre,
Demeke Mulat,
Meschi Meloria M.
Publication year - 2003
Publication title -
review of development economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.531
H-Index - 50
eISSN - 1467-9361
pISSN - 1363-6669
DOI - 10.1111/1467-9361.00175
Subject(s) - constraint (computer aided design) , subsidy , economics , agricultural economics , welfare , productivity , investment (military) , fertilizer , procurement , production (economics) , distribution (mathematics) , economic growth , microeconomics , chemistry , organic chemistry , mechanical engineering , mathematical analysis , mathematics , management , politics , political science , law , engineering , market economy
Using a nationally representative dataset, and information on why farmers did not purchase fertilizer, the authors estimate a double–hurdle fertilizer adoption model for Ethiopia. Access is an overriding constraint in four zones. Credit is shown to be a major supply–side constraint, suggesting that household cash resources are generally insufficient to cover fertilizer purchases. On the demand side, household size, formal education of the farmer, and the value–to–cost ratio have the largest impact on adoption and intensity of fertilizer use. The results underline the importance of increasing the availability of credit, developing labor markets, and reducing the procurement, marketing and distribution costs of fertilizer. The authors conclude that current large–scale transport, health, and education investment programs will positively impact smallholder productivity and household welfare. The price sensitivity of farmers suggests that an urea subsidy could be useful in redressing the nutrient imbalance currently observed in Ethiopia.