Policy Reform in Sub Saharan Africa

Agricultural adjustment policies in sub Saharan Africa have not delivered substantial increases in agricultural growth. We examine alternative explanations for this and argue that transitions and thresholds in agricultural growth processes are not sufficiently recognised and understood in dominant policy discourses. This is a particular problem with market failures for goods and services with private good characteristics and we need a greater emphasis on and understanding of the causes and nature of coordination failures which lead to these market failures. This paper examines core features of poor rural areas, the nature of coordination problems faced by different potential economic actors, the impacts of these problems on markets and economic development, and the ways that these have been addressed or ignored in different policies and policy approaches in Asia and Africa in the last 40 years. We conclude by drawing out the implications for policies seeking to promote pro-poor economic growth in poor rural areas today.Agricultural and Food Policy,

INSTITUTIONAL DIMENSIONS OF TRADE LIBERALISATION AND POVERTY

Trade policy liberalisation requires institutional change, in the sense of a change in the rules of the game. The question is whether these changes produce "superior institutions" judged in terms of a reduction of transactions costs; improved coordination; stronger strategic commitment to investing in needed specific assets; and allocative efficiency. In conventional approaches to the analysis of liberalisation, changed institutional arrangements are studied, but they tend to be considered in the category of "practical details": important but not especially intellectually interesting. In contrast, this paper argues for a parallel approach to the study of the effects of liberalisation on the rural poor, in which institutional matters are central. A broad range of institutional issues is considered, informed by a theoretical framework provided by the various strands within institutional economics. The framework set out and discussed leads to the contention that smallholder agriculture in poor countries needs coordinated market economy (CME) type institutions if it is to develop, at least at the earlier stages. Ideally, these would be based on deliberative institutions, working horizontally inside a sector, and also vertically along the supply chain. It is argued that the way forward is likely to involve a rethinking of the role of the state (at sub-national, national and international - aid donor - levels) and of the roles of producer organisations and other stakeholder (including trader) associations. The aim must be to find a way in which the state and other powerful actors can initiate deliberative processes and take a lead in encouraging appropriate asset specific investments, while at the same time planning to fade into the background as initial success is achieved. These conclusions challenge conventional analysis of trade policy liberalisation in poor countries and also challenge institutional specialists to provide insights, ideally quantifiable, into the consequences of those liberalisation policies which drive changes in such features as "non-standard institutional arrangements"; non-market coordination; and the roles of government.Food Security and Poverty, International Relations/Trade,

Market and Coordination Failures in Poor Rural Economies: Policy Implications for Agricultural and Rural Development

This paper argues that the disappointing outcomes of adjustment policies in poor rural economies, principally in sub-Saharan Africa, can be partly attributed to weaknesses in the neo-classical theory which underlies these polices and from associated failures to recognise structural changes (or transitions) in growing agricultural economies. After a brief description of agricultural policy changes in sub Saharan Africa, the mixed achievements of market liberalisation policies are explained using new institutional economic arguments regarding inherent difficulties in economic coordination in poor economies, difficulties which markets themselves cannot overcome. A novel framework is put forward for understanding coordination failure and integrating it with other causes of under-development notably low levels of technical and institutional development and poor governance. The paper concludes by considering the implications of these arguments for development policies in different sub-Saharan economies.development, coordination, markets, institutions, Marketing, O12, O17, Q12,

Coordination risk and cost impacts on economic development in poor rural areas

This paper addresses issues relevant to a critical problem in economic development: how to get rapid pro-poor economic growth in poor rural areas in Africa and South Asia where most of the world’s dollar a day poor live. It examines constraints to the development of coordinated exchange systems in poor rural areas, focusing on the core problem of thin markets and low density of economic activity in these areas. Transaction cost and risk analysis is integrated into a conventional neoclassical production economics framework to describe the existence of low level equilibrium traps in transactions and supply chains and to generate important insights for development policy.Development, agriculture, market liberalization, coordination problem

A POLICY AGENDA FOR PRO POOR AGRICULTURAL GROWTH

Economic growth has been low and the incidence and numbers of poor people remain very high in some parts of the world, notably in sub Saharan Africa and some parts of South Asia. Projections for poverty reduction suggest that these regions are likely to continue to hold very large numbers of very poor rural people in the foreseeable future. Theoretical arguments and empirical evidence suggest that in poor agrarian economies both the processes of structural change within national economies and micro-economic relations within rural economies give agriculture (and particularly intensive cereal based growth) a pre-eminent and unique role in economic development and in poverty reduction. However, reliance on pro-poor agricultural growth as the main weapon against rural poverty today faces more difficult challenges than those faced in the green revolution areas in the latter part of the 20th century, due to a number of features that together increase risk and uncertainty and raise costs and/or lower returns to agricultural investment. Many of these difficulties are endogenous to today's poor rural areas, others result from broader processes of global change, but it is argued that some are the direct result of policies supporting liberalisation and withdrawal of the state. A review of the green revolutions of the 20th century suggests that state interventions in agricultural markets were widely used and important in supporting sometimes short periods of critical market and technological development in the process of rural growth. Unfortunately the benefits of such interventions have been overlooked as a result of their very evident inefficiency and high costs, without a clear understanding of their institutional benefits. Policy and research implications of this analysis are discussed.Food Security and Poverty, International Development,

Institutions and economic policies for pro-poor agricultural growth

"This paper draws together findings from different elements of a research project examining critical components of pro-poor agricultural growth and of policies that can promote such growth in poor rural economies in South Asia and Sub-Saharan Africa. Agricultural growth, a critical driver in poverty reducing growth in many poor agrarian economies in the past, faces many difficulties in today's poor rural areas in South Asia and Sub-Saharan Africa. Some of these difficulties are endogenous to these areas while others result from broader processes of global change. Active state interventions in 'kick starting' markets in 20th century green revolutions suggest that another major difficulty may be current policies which emphasize the benefits of liberalization and state withdrawal but fail to address critical institutional constraints to market and economic development in poor rural areas. This broad hypothesis was tested in an analysis of the returns (in agricultural growth and poverty reduction) to different government spending in India over the last forty years. The results reject the alternate hypothesis underlying much current policy, that fertilizer and credit subsidies, for example, depressed agricultural growth and poverty reduction in the early stages of agricultural transformation. The results show initially high but then declining impacts from fertilizer subsidies; high benefits from investment in roads, education and agricultural R&D during all periods and varying benefits from credit subsidies over four decades; low impacts from power subsidies; and intermediate impacts from irrigation investments. These findings demand a fundamental reassessment of policies espousing state withdrawal from markets in poor agrarian economies. Given widespread state failure in many poor agrarian economies today, particularly in Africa, new thinking is urgently needed to find alternative ways of 'kick starting' markets ways which reduce rent seeking opportunities, promote rather than crowd-out private sector investment, and allow the state to withdraw as economic growth proceeds. Authors' AbstractAgricultural growth ,Poverty, Rural ,South Asia Rural poor ,Africa, Sub-Saharan ,Agrarian economies ,Globalization ,Green Revolution ,Poverty alleviation ,Government spending policy India ,

Coordination risk and cost impacts on economic development in poor rural areas

This paper addresses issues relevant to a critical problem in economic development: how to get rapid pro-poor economic growth in poor rural areas in Africa and South Asia where most of the world’s dollar a day poor live. It examines constraints to the development of coordinated exchange systems in poor rural areas, focusing on the core problem of thin markets and low density of economic activity in these areas. Transaction cost and risk analysis is integrated into a conventional neoclassical production economics framework to describe the existence of low level equilibrium traps in transactions and supply chains and to generate important insights for development policy