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Agricultural growth linkages in Ethiopia: Estimates using fixed and flexible price models

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Author Info

  • Diao, Xinshen
  • Fekadu, Belay
  • Haggblade, Steven
  • Seyoum Taffesse, Alemayehu
  • Wamisho, Kassu
  • Yu, Bingxin

Abstract

"Accelerating growth and poverty reduction, and the ultimate achievement of structural transformation, are the critical policy challenges in present day Ethiopia. This paper examines relevant growth options in terms of their impact on overall growth and poverty reduction in the country. It deploys a fixed-price semi-input-output model and a flexible-price economy-wide multi-market model for that purpose. The paper finds that agricultural growth can induce higher overall growth and faster poverty reduction than non-agricultural growth, although the latter can also have large growth effects in some cases. Among sub-sectors within agriculture, staple crops have stronger growth linkages. Decomposition of these effects also reveals that consumption linkages are much stronger than production linkages, i.e., the impact of increased consumption demand due to growth (agricultural and non-agricultural) is much larger than that of the corresponding expansion in input demand. Moreover, non-agricultural sectors have to grow in order to match growing supply of agricultural products and increasing demand for non-agricultural products. Otherwise, falling relative prices of agricultural products may dampen the realized gains in growth and poverty reduction." from Authors' Abstract

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Bibliographic Info

Paper provided by International Food Policy Research Institute (IFPRI) in its series IFPRI discussion papers with number 695.

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Date of creation: 2007
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Handle: RePEc:fpr:ifprid:695

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Keywords: Poverty reduction; Agricultural growth; Linkages; Staple food crops; non-agricultural sector; agricultural products; Prices;

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  1. Paul Dorosh & Steven Haggblade, 2003. "Growth Linkages, Price Effects and Income Distribution in Sub-Saharan Africa," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 12(2), pages 207-235, June.
  2. Kongsamut, Piyabha & Rebelo, Sérgio & Xie, Danyang, 1997. "Beyond Balanced Growth," CEPR Discussion Papers 1693, C.E.P.R. Discussion Papers.
  3. Diao, Xinshen & Pratt, Alejandro Nin & Ghautam, Madhur & Keough, James & Chamberlin, Jordan & You, Liangszi & Puetz, Detlev & Resnick, Danielle & Yu, Bingxin, 2005. "Growth options and poverty reduction in Ethiopia," DSGD discussion papers 20, International Food Policy Research Institute (IFPRI).
  4. Haggblade, Steven & Hazell, Peter, 1989. "Agricultural technology and farm-nonfarm growth linkages," Agricultural Economics, Blackwell, vol. 3(4), pages 345-364, December.
  5. Ruijs, Arjan & Schweigman, Caspar & Lutz, Clemens, 2004. "The impact of transport- and transaction-cost reductions on food markets in developing countries: evidence for tempered expectations for Burkina Faso," Agricultural Economics, Blackwell, vol. 31(2-3), pages 219-228, December.
  6. Block, Steven A., 1999. "Agriculture and economic growth in Ethiopia: growth multipliers from a four-sector simulation model," Agricultural Economics, Blackwell, vol. 20(3), pages 241-252, May.
  7. Easterly, William & de Melo, Martha & Ofer, Gur & DEC, 1994. "Service as a major source of growth in Russia and other former Soviet states," Policy Research Working Paper Series 1292, The World Bank.
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Cited by:
  1. Davis, Kristin & Swanson, Burton & Amudavi, David & Mekonnen, Daniel Ayalew & Flohrs, Aaron & Riese, Jens & Lamb, Chloe & Zerfu, Elias, 2010. "In-depth assessment of the public agricultural extension system of Ethiopia and recommendations for improvement:," IFPRI discussion papers 1041, International Food Policy Research Institute (IFPRI).

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