Measuring factor substitution and technological change in the Tunisian agricultural sector, 1971 - 2000

The production structure of Tunisian agriculture over the last three decades is investigated using a translog variable cost function. Standard results of neoclassical duality theory are used to obtain measures of elasticities of substitution between inputs, price elasticities of factor demands and the rate of growth and bias of technological progress. Empirical results obtained from the joint estimation of parameters of the cost and share equations indicate an increasing trend in the degree of substitutability between labour and intermediate inputs. The own-price elasticities of labour and intermediate inputs are inelastic. While the labour price elasticity of demand has increased over time, the intermediate input price elasticity of demand has declined. Finally, technological progress occurred at an impressive and sustained annual growth rate of 3.8 percent.