ABSTRACT
The theory of induced innovation has been developed mainly within the framework of the theory of the firm. In the induced innovation model, the productivity levels achieved by farmers in the most advanced countries can be viewed as arranged along a productivity frontier. This frontier reflects the level of technical progress achieved by the most advanced countries in each resource endowment classification. Rosenberg (1969) has suggested a theory of induced technical change based on "obvious and compelling need" to overcome the constraints on growth instead of relative factor scarcity and relative factor prices. A requisite for agricultural productivity growth is the capacity of the agricultural sector to respond to changes in factor and product prices. The contrasting patterns of productivity growth and factor use in U.S. and Japanese agriculture can be understood in terms of a process of dynamic adjustment to changing relative factor prices along a metaproduction function.
