Technology Adoption and Access to Credit in Tanzania: A Spatial Econometric Analysis
Okumu, Ibrahim Mike
African Economic Research Consortium
This paper aims to analyze the relationship between technology adoption and access to credit by farmers in Tanzania, with particular focus on spatial spillover effects on technology adoption. We examine new technology diffusion by farmers through their peers and measure geographical proximity using farms’ GIS localization data. Using the 2012-2013 Tanzanian Household Survey and a spatial lag probit model, we find evidence that farmers’ access to finance leads to increased agricultural technology adoption, and that the spillover effect plays a role in this process. In addition, our results are robust over a 3-year period (i.e., 2008-2009, 2010-2011, and 2012-2013). Finally, evidence of the existence of spillover effects in the adoption of agricultural technology suggests that interactions between farmers who are 'geographical neighbours' should be supported/exploited to achieve substantial efficiency and savings in new agricultural technology extension.