Determinants of agricultural diversification in Brazil: a spatial econometric analysis

Abstract

This research has as main objective to analyze the behavior and the importance of agricultural diversification for Brazil, considering its States, for the period from 2002 to 2018. We will propose an analytical model to make it possible to identify the determinants of agricultural diversification in Brazil. Empirically, the study estimates an SLX model using panel data and considers the spillover effects, highlighting the importance of location and neighborhood. The study's findings indicate a continued decline in crop diversity with a strong tendency to productive specialization in Brazilian agriculture, mainly in the states located in the Midwest and South regions of the country. The average growth rates of the indices presented negative values for the analysis period: − 0.41% per year for the Simpson index, − 0.58% per year for the Shannon index, and − 0.91% per year for the effective number of crops. It is important to note that some states are allocating practically the entire agricultural area to three or four dominant crops. As for the determinants of agricultural diversification, the results for Brazil are in line with the specialized literature.