Progress in agricultural mechanization has varied sig­nificantly  across the  ESAP  economies.  In recent times, mechanization has increased most strongly in South and Southeast Asia and China. By contrast, the mechanization trend has been stagnant or in slight decline in Australia and New Zealand (FAO, 2003). The use of capital intensifica­tion as a proxy for technological change and productivity improvements can be misleading. For example, although mechanization intensity in Australian broad acre cropping is expected to continue to decline over time relative to levels observed two decades ago, this reflects the adoption of new techniques such as no-tillage agriculture, which not only has beneficial implications for reducing land degradation but is typically productivity enhancing and more profitable (in the absence of herbicide resistance) (McTainsh et al., 2001; D'Emden et al., 2006).
     Other factors that will influence the level of agricul­tural productivity in the future include the level of public investment in agricultural research and rural infrastructure, improvements in inputs such as fertilizers, irrigation and genetically modified crops, environmental degradation and climate change. This is not an exhaustive list of the influ­ences on agricultural productivity, nor are the listed factors of equal importance with respect to their potential effects on productivity.
     In all Asian economies, the predominant source of growth over the coming decades will be attributable chiefly to improvements in capital and total factor productivity rather than labor inputs. However, it is difficult to disentangle the relative contributions of capital and labor productivity.
     Higher levels of education tend to promote mechani­zation. Substitution toward capital inputs from labor in farming is expected to further increase the importance of R&D in agriculture. Several countries within the ESAP re­gion including Australia, Philippines, India and China will be able to exploit their comparative advantage in research and jointly benefit from each other. Their commitment to­ward the continued development of their rural sectors will most likely benefit from joint R&D projects that focus on the development and adoption of AKST.
     Improvements in total factor or partial factor productiv­ity in the ESAP region have resulted from increased invest­ment in agricultural research and irrigation infrastructure. Returns to these investments have been highest in areas with significant land shortages but good institutional structures (Pingali and Heisey, 1999).
     The growth rate of areas harvested for agricultural production will decline from now to 2020, along with de­creased availability of arable land, increasing population pressures and land degradation (IFPRI, 2001). Given these limitations, yield growth becomes an important determi­nant of productivity growth. Of particular interest for this region is yield growth rates for cereals (including rice and wheat), which are projected to decline significantly in South Asia, Southeast Asia and East Asia over the period to 2020 (Figure 4-4).
     Agricultural productivity growth will be crucial to ensur­ing adequate food supplies, however this will be challenged over the coming decades by resource depletion, environ­mental degradation and increased market pressure to use food crops for ethanol feedstock. Agricultural research and