Does neighborhood matter? Spatial proximity and farmers’ technical efficiency

This article examines the effects of neighborhood on farmer's technical efficiency (TE) level, adopting a stochastic frontier and spatial Durbin regression models. Our study exploits three-wave household-level panel data from Ethiopian Rural Socioeconomic Survey (ERSS) collected between 2011 2015. We find that farmers have an average TE score 53%, implying substantial potential for improvement in production level. further there is positive statistically significant interdependence levels farms neighboring communities. Input use, education, other demographic characteristics are found to direct indirect effects. The findings suggest policies programs targeting productivity improvements agriculture need consider spillover