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Transaction costs and agricultural productivity

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  • Dorosh, Paul A.
  • Stifel, David
  • Minten, Bart

Abstract

This paper examines the mechanisms that transmit isolation into poverty in Madagascar using household survey data combined with a census of administrative communes. Given the importance of agriculture to the rural poor, where nine out of ten poor persons is engaged in farming, we concentrate on isolation manifesting itself in the form of high transaction costs such as the cost of transporting agricultural commodities to major market centers. We find that (a) the incidence of poverty in rural Madagascar increases with remoteness; (b) yields of major staple crops fall considerably as one gets farther away from major markets; (c) and the use of agricultural inputs declines with isolation. Simulation results using output from rice production function estimates suggest that halving travel time per kilometer on major highways (feeder roads) will increase primary season rice production by 1.3 (1.0) percent.

Suggested Citation

  • Dorosh, Paul A. & Stifel, David & Minten, Bart, 2003. "Transaction costs and agricultural productivity," MSSD discussion papers 56, International Food Policy Research Institute (IFPRI).
  • Handle: RePEc:fpr:mssddp:56
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    References listed on IDEAS

    as
    1. Delgado, Christopher L. & Rosegrant, Mark W. & Wada, Nikolas & Meijer, Siet & Ahmed, Mahfuzuddin, 2002. "Fish as food," MTID discussion papers 52, International Food Policy Research Institute (IFPRI).
      • Delgado, Christopher L. & Rosegrant, Mark W. & Wada, Nikolas & Meijer, Siet & Ahmed, Mahfuzuddin, 2002. "Fish as food," MSSD discussion papers 52, International Food Policy Research Institute (IFPRI).
    2. Marcel Fafchamps & Bart Minten, 1999. "Relationships and traders in Madagascar," Journal of Development Studies, Taylor & Francis Journals, vol. 35(6), pages 1-35.
    3. Nicholas Minot & Lisa Daniels, 2005. "Impact of global cotton markets on rural poverty in Benin," Agricultural Economics, International Association of Agricultural Economists, vol. 33(s3), pages 453-466, November.
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    Cited by:

    1. Singh, Shivendu Shekhar & Sarkar, Basudatta, 2022. "Transport accessibility and affordability as the determinant of non-motorized commuting in rural India," Transport Policy, Elsevier, vol. 118(C), pages 101-111.
    2. Cadot, Olivier & Olarreaga, Marcelo & Dutoit, Laure, 2005. "How Costly is it for Poor Farmers to Lift Themselves out of Subsistence?," CEPR Discussion Papers 5392, C.E.P.R. Discussion Papers.
    3. Shahidur Rashid, 2004. "Spatial Integration of Maize Markets in Post-liberalised Uganda," Journal of African Economies, Centre for the Study of African Economies, vol. 13(1), pages 102-133, March.
    4. Joshi, P.K. & Gulati, Ashok & Birthal, Pratap S. & Tewari, Laxmi, 2003. "Agriculture diversification in South Asia," MSSD discussion papers 57, International Food Policy Research Institute (IFPRI).
    5. Rios, Ana R. & Masters, William A. & Shively, Gerald E., 2008. "Linkages between Market Participation and Productivity: Results from a Multi-Country Farm Household Sample," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6145, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. Christian K.M. Kingombe, 2012. "The Linkage between Outcome Differences in Cotton Production and Rural Roads Improvements - A Matching Approach," IHEID Working Papers 12-2012, Economics Section, The Graduate Institute of International Studies.
    7. Cadot, Olivier & Dutoit, Laure & Olarreaga, Marcelo, 2006. "How costly is it for poor farmers to lift themselves out of poverty?," Policy Research Working Paper Series 3881, The World Bank.

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    Keywords

    Rural poor ; rural areas ; Rice production ; Poverty ; Household surveys Madagascar ;
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