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Market integration and structural transformation in a poor rural economy

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Abstract

By developing a simple theoretical model of the impact of market integration on sectoral output and employment in a poor rural setting, this paper demonstrates that trade can induce asymmetric growth. Under certain, plausible, assumptions, the non-farm sector will grow much faster than the agricultural sector when markets become integrated. Promoting market integration may thus be an effective way of encouraging diversification beyond agriculture and catalysing structural change in poor rural economies.

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  • Soderbom, Mans & Rijkers, Bob, 2009. "Market integration and structural transformation in a poor rural economy," Policy Research Working Paper Series 4856, The World Bank.
    • Handle: RePEc:wbk:wbrwps:4856
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    References listed on IDEAS

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    3. Dasgupta, Partha & Ray, Debraj, 1986. "Inequality as a Determinant of Malnutrition and Unemployment: Theory," Economic Journal, Royal Economic Society, vol. 96(384), pages 1011-1034, December.
    4. John Laitner, 2000. "Structural Change and Economic Growth," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 67(3), pages 545-561.
    5. Donald J. Harris, 1985. "The Theory of Economic Growth: From Steady States to Uneven Development," Palgrave Macmillan Books, in: George R. Feiwel (ed.), Issues in Contemporary Macroeconomics and Distribution, chapter 17, pages 378-394, Palgrave Macmillan.
    6. Krugman, Paul, 1998. "What's New about the New Economic Geography?," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 14(2), pages 7-17, Summer.
    7. de Janvry, Alain & Fafchamps, Marcel & Sadoulet, Elisabeth, 1991. "Peasant Household Behaviour with Missing Markets: Some Paradoxes Explained," Economic Journal, Royal Economic Society, vol. 101(409), pages 1400-1417, November.
    8. Romer, Paul M, 1987. "Growth Based on Increasing Returns Due to Specialization," American Economic Review, American Economic Association, vol. 77(2), pages 56-62, May.
    9. de Janvry, Alain & Fafchamps, M. & Sadoulet, Elisabeth, 1991. "Peasant Household Behavior with Missing Markets: Some Paradoxes Explain," CUDARE Working Papers 198579, University of California, Berkeley, Department of Agricultural and Resource Economics.
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    Cited by:

    1. Ms. Louise Fox, 2015. "Are African Households Heterogeneous Agents?: Stylized Facts on Patterns of Consumption, Employment, Income and Earnings for Macroeconomic Modelers," IMF Working Papers 2015/102, International Monetary Fund.

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    Keywords

    Food&Beverage Industry; Economic Theory&Research; Rural Poverty Reduction; Food Security;
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