Well below international prices crops sold at over

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: ing the fact that taxes from rural areas are difficult to collect) Government- imposed price distortions cause inputs into rural areas to be overprived (and outputs from rural areas to be correspondingly underpriced) ! they were transferring money from rural areas to urban areas Inputs expensive: Labor Credit Outputs cheaper Food Distributional bias + price distortion = inefficiency Problems? At the margin money should earn higher returns in the small agriculture sector or rural non- garm sector that it will in cities or large- scale urban based industries Inter- sectoral terms of trade should be against rural areas (again, limited evidence) URBAN BIAS (Political- economic version) Bates took lipton’s theory Food production problems were a result of discrimination against smallholders Main purpose: not to “industrialize” as with lipton but to prevent unrest in towns and cities Farmers being rational should normally respond by under- producing; governments compensate by: Subsidizing farms Taking over agro- business Importing food Marketing boards and state revenue; Traditionally agricultural production in PPEs was managed through state- owned marketing boards: Monopsonies in domestic markets Monopolies in commodity exports Local produces prices usually kept well below international prices; crops sold at over- valued exchange rates ! allowed governments to pocket the difference. Revenue still shrinking Structural adjustment and agricultural reform: Most urban- biased attempts to control food markets in SSA faield: Controlling market for domestic food crops (not export crops) was difficult Significant rent- seeking collusion between farmers and bureaucrats Where elites’ engaged...
View Full Document

Ask a homework question - tutors are online