ABSTRACT This study re‐examines the assumption that agricultural credit and pesticide‐intensive practices consistently stimulate growth across developing Asia. Using data from eight South and Southeast Asian economies (2002–2022), the analysis identifies a developmental threshold: the marginal productivity of financial and chemical inputs declines sharply once countries reach upper‐middle‐income status. Credit elasticity is positive in lower‐middle‐income South Asia (0.13%–0.27%) but becomes negative and statistically insignificant in upper‐middle‐income Southeast Asia. More notably, despite an average annual increase of 7% in pesticide use across the region, returns to chemical inputs become statistically insignificant and sometimes negative in more advanced agricultural systems such as Malaysia and Indonesia. These patterns show that as economies mature, the input‐intensive growth model encounters biological, regulatory, and structural limits. The findings challenge uniform policy prescriptions and support differentiated strategies: expanding credit access in capital‐constrained smallholder environments while shifting toward precision technologies and integrated pest management where chemical inputs face diminishing effectiveness. It is important to note that pesticide use serves only as a proxy for chemical‐intensive technological change and does not capture broader innovations such as mechanization, improved seed varieties, or digital tools. Overall, the results underscore that the effectiveness of credit and technology is closely tied to a country's position within the agricultural development trajectory, a nuance often obscured in aggregate regional analyses.
Emam et al. (Fri,) studied this question.