The history of agricultural growth and mechanization in some of today's industrial countries illustrates this generalization. In 1880, factor endowments differed widely among these countries, with Japan having only 0.65 hectares of land per male worker and the United States about forty times as much (see Binswanger and Ruttan 1978, tables 3-1 and 3-2).
First, they reduce the profitability of all forms of agricultural investment, including land improvements, irrigation, animals, and buildings. Second, they may cause farmers to allocate whatever investment funds are available away from mechanical inputs. This trend will be stronger the more expensive and long-lived the mechanical inputs are and the easier it is to produce other forms of capital (such as land improvements) by hand.

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The history of agricultural growth and mechanization in some of today's industrial countries illustrates this generalization. In 1880, factor endowments differed widely among these countries, with Japan having only 0.65 hectares of land per male worker and the United States about forty times as much (see Binswanger and Ruttan 1978, tables 3-1 and 3-2).
First, they reduce the profitability of all forms of agricultural investment, including land improvements, irrigation, animals, and buildings. Second, they may cause farmers to allocate whatever investment funds are available away from mechanical inputs. This trend will be stronger the more expensive and long-lived the mechanical inputs are and the easier it is to produce other forms of capital (such as land improvements) by hand.

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