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Impact of agricultural input subsidy policy on market participation and income distribution in Africa: A bottom-up/top-down approach

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  • Camara, Alhassane
  • Savard, Luc

Abstract

Previous literature on the effects of agricultural input subsidy programs on smallholder market participation has only focused on partial equilibrium analysis, while ignoring important general equilibrium effects. Therefore, this study fills this gap by highlighting the critical role of targeting in the implementation of the agricultural input policy in the Malawian context. Specifically, we establish a bi-directional link between a farm household model and a general equilibrium model in order to explore the spillover effects of the input policy on market orientation and income distribution. Based on the findings, the partial equilibrium analysis underestimates the effect of the input policy and neglects important heterogeneities between farmers. More importantly, we find that extending the program to farmers who are excluded from the cereal and/or labor markets can lead to higher market participation, economic growth, and a reduction in poverty. Our findings suggest better targeting to increase the impact of agricultural input policy on market participation.

Suggested Citation

  • Camara, Alhassane & Savard, Luc, 2023. "Impact of agricultural input subsidy policy on market participation and income distribution in Africa: A bottom-up/top-down approach," Economic Modelling, Elsevier, vol. 129(C).
    • Handle: RePEc:eee:ecmode:v:129:y:2023:i:c:s0264999323003802
    DOI: 10.1016/j.econmod.2023.106568
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    2. Hu, Xin & Zhu, Bo & Zhang, Bokai & Zhou, Sitong, 2024. "Do internal and external risk spillovers of the food system matter for national food security?," Economic Modelling, Elsevier, vol. 136(C).

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    More about this item

    Keywords

    Computable general equilibrium; Farm household; Agricultural policy; Agricultural marketing; Microsimulation;
    All these keywords.

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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