Effects of R&E Activities on Rice Production in Taiwan, 1976-93 : Revised

Abstract

Using the translog variable cost function framework, this paper investigates quantitatively the impacts of the public R & E activities on the production structure of the Taiwanese rice industry for the 1976-93 period. It was found that the R & E activities by the government have played an important role in raising the productivity in the Taiwanese rice sector since the mid-1970s. Furthermore, technological change due to the public R & E activities has been biased toward saving labor, and using intemediate inputs and capital. These biases have been consistent with the changes in the relative prices of these factor inputs, i.e., saving a relatively more expensive factor input (labor) and using relatively less expensive factor inputs (intermediate inputs and capital). In this sense, the public R & E activities have been sensitive to the price signal of the factor markets. This finding is consistent with the Hicksian induced innovation theory.