Bundled Contracts and Technological Diffusion Evidence from the Brazilian Soybean Boom

Technological change in the 1970s and 1980s made it possible to grow soybeans in the remote Brazilian Savanna. However, multiple constraints typical of a developing region prevented many ranchers from adopting soybeans. Following the macroeconomic reforms that opened up the market in Brazil, international traders introduced a new farmer–trader contract that bundled technology, finance, inputs, and market access. The analysis of a novel panel dataset with farm-level census data reveals that this bundled contract led to rapid technological diffusion, agricultural expansion, and a 10fold increase in agricultural productivity by enabling the conversion of marginal land into commercial soybean plantations