DT 04-26 Total Factor Productivity in Agriculture in a small and natural resources abundant economy. The case of Uruguay, 1870s-2010s

Abstract
This article presents a long-run estimate of total factor productivity (TFP) in Uruguayan agriculture for the period 1870–2016. Drawing on a growth accounting framework and the construction of a new historical dataset, it provides homogeneous and consistent estimates of TFP for the agricultural sector as a whole and for its main subsectors: crops and livestock. The analysis situates productivity dynamics within the broader trajectory of national development, highlighting the interaction between technological change, institutional arrangements, and international integration. The findings identify three interrelated long-term patterns: cycles of modernization associated with waves of technological adoption and external integration; prolonged episodes of adaptive stagnation, during which growth relied primarily on the extensive use of natural resources; and alternating sectoral divergence between crops and livestock, linked to differentiated technological and institutional regimes. Overall, agricultural TFP grew at an average annual rate lower than 1% between 1870 and 2016, reflecting a discontinuous path of innovation rather than a linear process of progress. Efficiency gains materialized when institutions, policies, and markets were coherently aligned, and stalled when such conditions weakened. By combining long-run TFP measurement with historical interpretation, the paper contributes to a deeper understanding of the structural determinants of agricultural productivity and of the role of the agricultural sector in Uruguay’s economic development.