Capital formation and growth in the israeli cooperative farm

The Israeli cooperative farm is characterized by a high rate of expansion; the annual rate of growth of the cooperatives' gross product is 11.5 percent. The analysis of the growth pattern of this farm enterprise from 1936 to 1960 suggests that 2 percent of the annual rate of growth of the gross product can be attributed to capital, 1.5 percent to land and labor, 5 percent to the extended utilization of raw materials, and a residual of 3 percent to “technical progress.” A closer examination reveals that a considerable portion of the last is associated with capital formation, probably as a result of technological improvements carried through the flow of gross investments. A smaller portion of the unexplained growth can be attributed to improvements in the “managerial capacity” of the firms under study.