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Recent Developments of Agricultural Markets in East Africa

In: Community, Market and State in Development

Author

Listed:
  • Takashi Yamano
  • Yoko Kijima
  • Tomoya Matsumoto
  • Megumi Muto

Abstract

The importance of the working of community mechanisms in rural markets is recognized by many development economists. Professor Yujiro Hayami’s insightful field observations, based on the economic theories of games and transaction costs, have helped us understand the roles of community mechanisms in rural markets (Aoki and Hayami, 2001a; Hayami and Kikuchi, 2000; Hayami and Otsuka, 1993). He argues that the major barrier against the development of markets in developing economies is the absence of an effective mechanism to protect property rights and to enforce contracts (Aoki and Hayami, 2001b). This absence raises transaction costs, which may keep farm households out of markets by holding the farm-gate prices of crops below their reservation prices. Hayami (2009) points out, however, that the community mechanisms of contract enforcement based on mutual trust or social capital may significantly reduce transaction costs. Although his observations are mostly from Asian countries, his argument is also applicable to African rural markets.

Suggested Citation

  • Takashi Yamano & Yoko Kijima & Tomoya Matsumoto & Megumi Muto, 2010. "Recent Developments of Agricultural Markets in East Africa," Palgrave Macmillan Books, in: Keijiro Otsuka & Kaliappa Kalirajan (ed.), Community, Market and State in Development, chapter 15, pages 245-261, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-29501-8_15
    DOI: 10.1057/9780230295018_15
    as

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