The joint effects of information and financing constraints on technology adoption: evidence from a field experiment in rural Tanzania
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Date
2021-10-04
Journal Title
Journal ISSN
Volume Title
Publisher
Elsevier
Abstract
Low investment in profitable technologies contributes to persistent poverty. Many farmers in developing coun-
tries invest too little in fertilizer despite evidence that fertilizer is profitable. This field experiment investigates
a two-part explanation: (1) farmers are reluctant to invest without farm-specific evidence of profitability,
possibly because of heterogeneous returns, and (2) information is not sufficient to increase investment because
of financing constraints. Farmers in one arm of the experiment receive fertilizer recommendations based on
tests of their soils, others receive recommendations paired with an input subsidy, and others receive only the
input subsidy. Only farmers who receive recommendations and the subsidy increase fertilizer application and
yields relative to the control group. The financing constraint may explain limited response to heterogeneous
fertilizer recommendations. The approximate net benefit of increased yields, accounting for the full cost of
inputs and soil tests, is equivalent to average wages for seven days of work.
Description
Journal Article
Keywords
Information, Liquidity, Sub-Saharan Africa, Soil quality, Fertilizer, Agriculture
Citation
https://www.elsevier.com/open-access/userlicense/1.0/