Agricultural Productivity, With an International Perspective
Friday, Jan. 5, 2018 2:30 PM - 4:30 PM
- Chair: Sebastian Sotelo, University of Michigan
Piggy-back Exporting, Intermediation, and the Distributional Gains From Trade in Agricultural Markets
AbstractWhen the world price of a crop increases, how do the incomes of the crop's farmers in a developing country change? This paper investigates the distributional gains stemming from changes in agricultural world prices. Agricultural markets in developing countries are often characterized by the presence of a large number of small farmers who sell their produce to one or few big companies with significant monopsony or oligopsony power. We develop a flexible theoretical framework that captures this market structure and allows us to examine the impact of international trade on the incomes of small farmers, agribusiness and intermediaries in developing countries. Using household-level evidence from Kenya, we empirically study the magnitude of the trickle-down effect of world price changes on the incomes of small farmers. Small farmers benefit from quality spillovers when selling through agribusinesses, but they receive 30% to 48% lower trickle down of world price changes from agribusinesses compared with intermediaries.
Eliminating Uncertainty in Market Access: The Impact of New Bridges in Rural Nicaragua
AbstractWe measure the impact of increasing integration between rural villages and outside labor markets. Seasonal flash floods cause exogenous and unpredictable loss of market access. We build bridges that eliminate this risk. Identification exploits variation in riverbank characteristics that preclude bridge construction in some villages, despite similar need. We collect detailed annual household surveys over three years, and weekly telephone followups to study contemporaneous effects of flooding. Floods decrease labor market income by 18 percent when no bridge is present. Bridges eliminate this effect. The indirect effects on labor market choice, farm investment and profit, and savings are quantitatively important and consistent with the predictions of a general equilibrium model in which farm investment is risky and the labor market can be used to smooth shocks. Improved rural labor market integration increases rural incomes not just through higher wages, but also through these quantitatively important indirect channels.
Market Structure, GVCs, and Agricultural Productivity: The Global Fertilizer Market
AbstractDifferences in agricultural productivity go a long way in accounting for overall productivity differences between poor and rich countries. We explore how the characteristics of the global market for artificial fertilizer, a crucial input for the adoption of high-yielding crops, help account for this productivity disparity. First, we document the relation between the price of fertilizer and productivity in a cross-section of countries. Second, we develop a model that features large firms in a global value chain and estimate it, combining micro data on fertilizer producers with macro data on consumption and trade flows of fertilizers. Finally, we use the model to study the role of market size and proximity to potential suppliers in determining competition and prices across countries.
- O1 - Economic Development