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Realizing the gains from trade: Export crops, marketing costs, and poverty

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  • Balat, Jorge
  • Brambilla, Irene
  • Porto, Guido

Abstract

This paper explores the role of export costs in the process of poverty reduction in rural Africa. We claim that the marketing costs that emerge when the commercialization of export crops requires intermediaries can lead to lower participation into export cropping and, thus, to higher poverty. We test the model using data from the Uganda National Household Survey. We show that: i) farmers living in villages with fewer outlets for sales of agricultural exports are likely to be poorer than farmers residing in market-endowed villages; ii) market availability leads to increased household participation in export cropping (coffee, tea, cotton, fruits); iii) households engaged in export cropping are less likely to be poor than subsistence-based households. We conclude that the availability of markets for agricultural export crops help realize the gains from trade. This result uncovers the role of complementary factors that provide market access and reduce marketing costs as key building blocks in the link between the gains from export opportunities and the poor.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of International Economics.

Volume (Year): 78 (2009)
Issue (Month): 1 (June)
Pages: 21-31

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Handle: RePEc:eee:inecon:v:78:y:2009:i:1:p:21-31

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Web page: http://www.elsevier.com/locate/inca/505552

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Keywords: Exports of coffee Tea Cotton Trade costs Trade facilitation Market access Intermediation Uganda;

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  1. Pinelopi Koujianou Goldberg & Nina Pavcnik, 2007. "Distributional Effects of Globalization in Developing Countries," Journal of Economic Literature, American Economic Association, vol. 45(1), pages 39-82, March.
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  3. Ashraf, Nava & Gine, Xavier & Karlan, Dean, 2008. "Finding missing markets (and a disturbing epilogue) : evidence from an export crop adoption and marketing intervention in Kenya," Policy Research Working Paper Series 4477, The World Bank.
  4. Nicita, Alessandro, 2009. "The price effect of tariff liberalization: Measuring the impact on household welfare," Journal of Development Economics, Elsevier, vol. 89(1), pages 19-27, May.
  5. Paul Collier & Jan Willem Gunning, 1998. "Explaining African economic performance," Economics Series Working Papers WPS/1997-02.2, University of Oxford, Department of Economics.
  6. Rachel Kranton & Anand V. Swamy, 2008. "Contracts, Hold-Up, and Exports: Textiles and Opium in Colonial India," American Economic Review, American Economic Association, vol. 98(3), pages 967-89, June.
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  15. Jorge Balat & Irene Brambilla & Guido Porto, 2007. "Realizing the Gains From Trade: Export Crops, Marketing Costs, and Poverty," NBER Working Papers 13395, National Bureau of Economic Research, Inc.
  16. Irene Brambilla & Guido G. Porto, 2011. "Market structure, outgrower contracts, and farm output. Evidence from cotton reforms in Zambia," Oxford Economic Papers, Oxford University Press, vol. 63(4), pages 740-766, December.
  17. Nigel Key & Elisabeth Sadoulet & Alain De Janvry, 2000. "Transactions Costs and Agricultural Household Supply Response," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(2), pages 245-259.
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Citations

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Cited by:
  1. World Bank, 2010. "Uganda - Public Expenditure Review : Strengthening the Impact of the Roads Budget," World Bank Other Operational Studies 2941, The World Bank.
  2. Bensidoun, Isabelle & Jean, Sébastien & Sztulman, Aude, 2011. "International trade and income distribution : reconsidering the evidence," Economics Papers from University Paris Dauphine 123456789/4212, Paris Dauphine University.
  3. Luis Carvalho & Aurora A.C. Teixeira, 2011. "Where are the poor in International Economics?," FEP Working Papers 425, Universidade do Porto, Faculdade de Economia do Porto.
  4. Jorge Balat & Irene Brambilla & Guido Porto, 2007. "Realizing the Gains From Trade: Export Crops, Marketing Costs, and Poverty," NBER Working Papers 13395, National Bureau of Economic Research, Inc.
  5. Cadot, Olivier & Fernandes, Ana & Gourdon, Julien & Mattoo, Aaditya, 2011. "Impact Evaluation of Trade Interventions: Paving the Way," CEPR Discussion Papers 8638, C.E.P.R. Discussion Papers.
  6. Erhan Artuç & Germán Bet & Irene Brambilla & Guido Porto, 2013. "Trade Shocks and Factor Adjustment Frictions: Implications for Investment and Labor," Department of Economics, Working Papers 101, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata.
  7. Raballand, Gael & Macchi, Patricia & Merotto, Dino & Petracco, Carly, 2009. "Revising the roads investment strategy in rural areas : an application for Uganda," Policy Research Working Paper Series 5036, The World Bank.
  8. Kuhlgatz, Christian & Abdulai, Awudu, 2011. "Determinants and Welfare Impacts of Export Crop Cultivation - Empirical Evidence from Ghana," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114692, European Association of Agricultural Economists.
  9. Shepherd, Ben & Delpeuch, Claire, 2007. "Subsidies and regulatory reform in West African cotton: What are the development stakes?," MPRA Paper 2289, University Library of Munich, Germany.

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