The productivity and employment effects of the second IBRD rural credit protect on large and small farms in the Philippines
Date
1982-04
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Abstract
This paper is about the impact of the Second IBRD Rural Credit Project on productivity and employment of large and small farms in the Philippines. The objective of the study is to assess the comparative impact of the Credit Program on two groups of farms, the beneficiaries of the program and the non-borrowers; further segregated by farm sizes. Data used in this study were based on a NEDA-Central Bank survey conducted from August to October 1980 in eight provinces distributed nationwide; these provinces having the greatest number of target beneficiaries. The impact on productivity was measured by using a Cobb-Douglas production model which indicated the percentage change in the quantity of output resulting from a percentage change in the quantity of input. The impact of non-measurable inputs associated with the farms' efficiency was also measured through a test for relative technical and price efficiencies for both rice and sugar. By using an input demand function, the least cost combination of two resources to produce a given level of output was arrived at. The amount of output that farms would wish to produce and sell given the level of inputs that would maximize profits was obtained from the supply function. The demand and supply functions were both derived from the Cobb-Douglas production function when translated to a profit function. The extent of project impact was imputed through the inclusion of the credit dummy and its corresponding production elasticity in the expressions. The impact of employment was measured by obtaining the differences in labor employment on a "before-after" basis, and the differences were tested for significance. The extent of relationship between labor and the various contributory factors that may explain changes in labor employment was determined through a multiple regression technique. Results obtained reveal that the Second IBRD Rural Credit Program has a positive impact on productivity and employment on both large and small farms; i.e. it increased the productivity and employment of farms.