EDUCATION IN AGRICULTURAL PRODUCTIVITY, EFFICIBNCY, AND DEVELOPMENT: THE NEPALESE CASE

Nepalese agricultural productivity growth has been very low for a long time. An important reason is the low level of technological innovation and lack of substantial investment in the development of human capital (Schultz, 1964). Education makes a substantial contribution to agricultural productivity in areas of changing technology (Nelson and Phelps; and Schultz, 1975) and contributes to productivity through the worker and allocative effectsl (Welch). This paper studies the main agricultural and educational characteristics of modernizing and traditional regions of Nepal to determine the factors responsible for differences in the levels of technological innovation, education, and extension between the regions; examines whether there is a relationship between education and factors such as farm income or modern input use; investigates whether education contributes to farm productivity through the worker, allocative, or both effects in the two types of areas; tests whether education makes a substantially higher contribution to output in the technolgically dynamic environment than in the traditional area; determines whether education and extension are substitutes in the farm decisionmaking process; and tests whether the educated farmers attain higher economic efficiency than the illiterates.