Labor, Liquidity, Learning, Conformity and Smallholder Technology Adoption: The Case of Sri in Madagascar

Abstract

This paper explores the roles of seasonal labor and liquidity constraints, learning, and social conformity factors in explaining the adoption of a high-yielding, low-external input rice production method in Madagascar, called the System of Rice Intensification (SRI). We present a simple, multi-period model of technology adoption, and then use a dynamic sample selection model to analyze the decisions to adopt, expand and disadopt this method. We find that seasonal liquidity constraints discourage adoption by poorer farmers despite the minimal cash outlays required, while household labor constraints limit the extent of adoption conditional on initial experimentation. Learning effects - both from one's own experience and from exposure to others with experience with the technology - exert significant influence over whether to try the method, the proportion of area planted in it, and whether to continue with it. Finally, we find strong evidence that social conformity considerations affect farmers' discrete decision over whether or not to experiment with the new technology.