Public infrastructure and productivity growth in Philippine agriculture, 1974-2000

We examine the impact of public infrastructure on the productivity performance of Philippine agriculture by applying a translog cost-based model to the regional agricultural data for years 1974-2000. From our results, public infrastructure reduces production cost, thereby enhancing productivity growth in Philippine agriculture. In terms of TFP decomposition, public infrastructure is noted to contribute significantly to productivity growth during the late 1970s, although its contribution is observed to be declining in the 1980s but recovering in the 1990s. The decline had been triggered by the reduced provision of public infrastructure. On the other hand, the improvement in its contribution in recent years has not helped reverse the overall decline of productivity growth. In this paper, we establish the importance of roads in terms of altering input demand and enhancing productivity in Philippine agriculture.