The graph is from a new paper by Mendali, Ames, & Gunter (February, 2013). The conclusions:
The title of the paper is "Total Factor Productivity in Brazil’s and Argentina’s Agriculture: A Comparative Analysis."The agricultural sector in both Brazil and Argentina is competitive in the world market. In the early 1970s, there was little difference in both countries’ agricultural production. However, over time differences have been increasing. The annual growth rate in agriculture is much higher in Brazil than in Argentina. The results of this study shows that TFP change in Brazilian agriculture has a positive trend where as the agricultural sector in Argentina experiences a negative trend in TFP. More importantly, the change in TFP accelerated in Brazil in mid 1980s after the agricultural reform took place. However, around the same time period, agricultural TFP in Argentina started decelerating more intensely. Surprisingly, efficiency change in Argentina’s agriculture is almost stagnant over the sample period, and it was facing technical regress from mid-1980s to mid-1990s. Argentina has a very strong agricultural background with the capacity to produce many crops, most notably the ability to produce a large amount of wheat and soybeans. But the policy background of its government has been very different from that of Brazil. Argentina’s policy focuses on taxing its agricultural sector in order to subsidize other economic sectors. Argentina is sharply contrasted with Brazil by the lack of policies designed to promote agriculture and capture the growth potential of this export oriented sector.
HT: Maximo Rossi.