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Subsistence farming and factor misallocation:Evidence from Ugandan agriculture

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  • Bruno Morando

    (Department of Economics, Maynooth University.)

Abstract

This paper presents a model where misallocation in the agricultural factors of production is the result of frictions in the food market which result in a disproportionately large subsistence sector. The empirical analysis, based on microdata on Ugandan farms, corroborates the theoretical predictions of the qualitative model. Specifically: subsistence farmers operate inefficiently high shares of land and capital and the efficiency losses are more severe in areas where subsistence farming is more widespread, possi-bly due to higher transportation costs. Conversely, I find no relationship between the level of misallocation and credit access and/or land market activity. These findings suggest that market connectivity also plays a key role in determining the efficiency of agricultural input distribution and that land market liberalization is a necessary but not sufficient condition to tackle misallocation.

Suggested Citation

  • Bruno Morando, 2021. "Subsistence farming and factor misallocation:Evidence from Ugandan agriculture," Economics Department Working Paper Series n308-21.pdf, Department of Economics, National University of Ireland - Maynooth.
    • Handle: RePEc:may:mayecw:n308-21.pdf
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    More about this item

    Keywords

    Misallocation; Productivity; Agriculture; Uganda;
    All these keywords.

    JEL classification:

    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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