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some simple statistical tests to ascertain whether there are significant differences in
the welfare determinants of the farmers belonging to the two groups (Hafi and
Ranaweera 1990). The rationale behind this approach is that there is an impact on
productivity if the dummy variable is significant. The significant differences found
among welfare indicators are then attributed to this impact on productivity.
However, when a production function between two farmer groups is
estimated using pooled data with a dummy variable, the implicit :issumption is that
there is only one set of structural parameters common to the two groups. The only
difference, if the technolop had an impact, would be in the intercepts. This
represents only partial reality because a substantial difference between the
technologies used by the t ~'o groups of farmers nlould most probably result in two
different production functions with different parameters for another variable. This
necessarily changes the factor proportions and results in changes in factor incomes
(factor shares) and consequzntly in personrll incomes.
In the earlier approach, the differences in welfare indicators between the two
groups of farmers are unquestioningly attributed to adoption of the new technology.
The actual factors that link a technological change to a change in f:lrm welfare (i.e.,
income generation and distribution parameters) are left totally unexamined because
of a paucity of data
In this study, three facets of this in1p:lct were considered:
o If the key practices or inputs of the new technology package are adopted
widely, it can be stated that there has been an impact on agronomic
practices (i.e., there has been a technical inipact);
o Adoption of some agronomic practices, or a technical impact alone, does
not guarantee an economic impact. Economic impact req~lires the
adoption of practices to such a degree that a structural change is induced
in the production functions of the farm; and
o A structural change leads to changes in functional and, thereby, personal
income distributions, which, in turn, vary .the levels of welfare and give
rise to a welfare impact.
The levels of adoption of various components of the tecllnology must 172
examined to determine their agronomic impact on farm practices. To ascertain the
economic impact, an analysis is required of structur:ll ch:lnges in production
functions and of changes in factor payments.
If any welfare impact of the new technology exists, a c11:lnge in the le\fels and
distribution of personal income would rnost probably be cliscernihle. The factor
incomes are, therefore, converted to personal incomes by taking into account the
ownership of the various factors by farmers and by other individuals or institutions.