Burley Tobacco Clubs in Malawi: Nonmarket Institutions for Exports

This paper studies nonmarket institutions that facilitate exports. In Malawi, as in many other developing countries, farmers face numerous constraints that disconnect them from export markets. We explore the role of a local institution, the burley tobacco clubs, in bridging smallholders to exports. Burley clubs potentially enable farmers to increase their tobacco farming productivity by providing services related to institutional access, collective action, economies of scale, and supporting network. Using matching methods and instrumental variable techniques, we find that tobacco club membership causes an increase in output per acre between 40 and 74 percent and an increase in tobacco sales per acre between 45 and 89 percent. Instead, neither the land share allocated to tobacco nor the unit value obtained by the producers is affected by club membership.