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Technical Efficiency and Evidence of Economies of Scope in Botswana Agriculture: A Stochastic Input Distance Function Approach (1979-1996)
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This study estimate technical efficiency indices and examines evidence of economies of scope in Botswana agriculture for each 18 districts and commercial sector using a multiple-output multiple-input stochastic input distance function approach covering

Research Group
 Macroeconomic Forecasting

Date
  06th July 2017

Author
 Johane Moilwa Motsatsi

Keywords
  technical efficiency; inefficiency; economies of scope; stochastic input distance function; trans-log; multi-input and multi-output function

statement

This study estimate technical efficiency indices and examines evidence of economies of scope in
Botswana agriculture for each 18 districts and commercial sector using a multiple-output
multiple-input stochastic input distance function approach covering data from 1979 to 1996. The
estimated model provides input-output relations, economies (diseconomies) of scope and technical
inefficiency. All the production outputs (cattle, crops and goats/sheep) were significant with expected
signs. The estimated mean technical efficiency of 0.885 for 18 districts and the commercial sector was
obtained. This suggest the existence of inefficiency in Botswana agricultural production which
indicates that there is opportunity to increase production with the same quantities of input factors, and
through adaptation of improved technology such as irrigation, use of fertilisers, and improved high
quality crops and livestock. There is significant in economies of scope between the production of cattle
and goat/sheep, at the 1 percent level, and cattle and crops at 5 percent level. This existence of
economies of scope indicates that higher economic returns are possible through efficient use of labour
and livestock feeds, and reducing risk by not producing output (e.g., crops) that is easily affected by
droughts and poor soils.

Journal of Economics and Public Finance; (2015) Vol. 1, No. 1


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