The impact of high value markets on smallholder productivity in the Ecuadorean Sierra: A Stochastic Production Frontier approach correcting for selectivity bias

This paper uses data from small-scale potato farmers in Ecuador to examine the impact of the program Plataformas de Concertación on productivity growth. Using propensity score matching combined with a Stochastic Production Frontier model that corrects for sample selection bias, we disaggregate the yield growth attributable to the program into technological change (TC) and technical efficiency (TE). While the results do not exhibit a clear indication of selection bias, the analysis does show that on average beneficiaries exhibit higher yields than control farmers given the same input levels, but lower TE with respect to their own frontiers. These results suggest that while the program raised the technology gap in favor of beneficiaries, it had a negative effect on TE in the short run. The latter finding is consistent with the notion that beneficiaries enjoyed a significant change in production techniques, but it is very likely that they were still in the “learning by doing” stages at the time the data was collected. In fact, the results suggest a fast recovery in TE levels on the part of beneficiaries as time with project increased.