Multinational supermarket chains in developing countries: Does local agriculture benefit
AbstractThere is no consensus in the empirical literature on how entry of multinational supermarket chains affects farmers in developing countries. We quantify the dynamic effects of supermarket expansion on agriculture within a structural framework that clarifies the adjustment mechanisms involved. The model specification takes the potential productivity linkage between supermarkets and local suppliers into account. While econometric analyses struggle with causality issues, we analyze the endogenous interaction between supermarkets’ choice of suppliers and agricultural productivity. Based on numerical simulations, two results emerge. First, we offer a possible understanding of the conflicting evidence in the empirical literature. Whether farmers benefit from supermarkets or get stuck in a low productivity trap depends on the extent of local constraints related to production capacity and market access. Second, supply chain development initiated by supermarkets can help farmers escape the low productivity trap. While supermarkets face a short run cost, they gradually gain from more productive local suppliers.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Department of Economics, Norwegian University of Science and Technology in its series Working Paper Series with number 9408.
Length: 30 pages
Date of creation: 08 Sep 2008
Date of revision:
Other versions of this item:
- Hildegunn E. Stokke, 2009. "Multinational supermarket chains in developing countries: does local agriculture benefit?," Agricultural Economics, International Association of Agricultural Economists, vol. 40(6), pages 645-656, November.
- NEP-AGR-2008-09-29 (Agricultural Economics)
- NEP-ALL-2008-09-29 (All new papers)
- NEP-MKT-2008-09-29 (Marketing)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Dave D. Weatherspoon & Thomas Reardon, 2003. "The Rise of Supermarkets in Africa: Implications for Agrifood Systems and the Rural Poor," Development Policy Review, Overseas Development Institute, vol. 21, pages 333-355, 05.
- Hildegunn Ekroll Stokke & Jørn Rattsø & Xinshen Diao, 2001.
"International spillovers, productivity growth and openness in Thailand: An intertemporal general equilibrium analysis,"
Working Paper Series
2202, Department of Economics, Norwegian University of Science and Technology.
- Diao, Xinshen & Rattso, Jorn & Stokke, Hildegunn Ekroll, 2005. "International spillovers, productivity growth and openness in Thailand: an intertemporal general equilibrium analysis," Journal of Development Economics, Elsevier, vol. 76(2), pages 429-450, April.
- Benhabib, Jess & Spiegel, Mark M., 1994. "The role of human capital in economic development evidence from aggregate cross-country data," Journal of Monetary Economics, Elsevier, vol. 34(2), pages 143-173, October.
- Terry Roe & Xinshen Diao, 2004. "Capital Accumulation and Economic Growth: The Case of the Retail Food Industry in Developing Countries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(3), pages 788-794.
- Daron Acemoglu & Jaume Ventura, 2001.
"The World Income Distribution,"
NBER Working Papers
8083, National Bureau of Economic Research, Inc.
- Caselli, Francesco & Coleman II, Wilbur John, 2000.
"The World Technology Frontier,"
CEPR Discussion Papers
2584, C.E.P.R. Discussion Papers.
- Beata Smarzynska Javorcik, 2004.
"Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers Through Backward Linkages,"
American Economic Review,
American Economic Association, vol. 94(3), pages 605-627, June.
- Beata K. Smarzynska, 2003. "Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers through Backward Linkages," William Davidson Institute Working Papers Series 548, William Davidson Institute at the University of Michigan.
- Smarzynska, Beata K., 2002. "Does foreign direct investment increase the productivity of domestic firms : in search of spillovers through backward linkages," Policy Research Working Paper Series 2923, The World Bank.
- Ricardo Hernández & Thomas Reardon & Julio Berdegué, 2007. "Supermarkets, wholesalers, and tomato growers in Guatemala," Agricultural Economics, International Association of Agricultural Economists, vol. 36(3), pages 281-290, 05.
- Rachel Griffith & Stephen Redding & John Van Reenen, 2000.
"Mapping the two faces of R&D: productivity growth in a panel of OECD industries,"
IFS Working Papers
W00/02, Institute for Fiscal Studies.
- Rachel Griffith & Stephen Redding & John Van Reenen, 2004. "Mapping the Two Faces of R&D: Productivity Growth in a Panel of OECD Industries," The Review of Economics and Statistics, MIT Press, vol. 86(4), pages 883-895, November.
- Rachel Griffith & Stephen Redding & John Van Reenen, 2000. "Mapping the Two Faces of R&D: Productivity Growth in a Panel of OECD Industries," CEP Discussion Papers dp0458, Centre for Economic Performance, LSE.
- Griffith, Rachel & Redding, Stephen J & Van Reenen, John, 2000. "Mapping The Two Faces Of R&D: Productivity Growth In A Panel Of OECD Industries," CEPR Discussion Papers 2457, C.E.P.R. Discussion Papers.
- David Neven & Thomas Reardon, 2004. "The Rise of Kenyan Supermarkets and the Evolution of their Horticulture Product Procurement Systems," Development Policy Review, Overseas Development Institute, vol. 22(6), pages 669-699, November.
- Emek Basker, 2007.
"The Causes and Consequences of Wal-Mart's Growth,"
Journal of Economic Perspectives,
American Economic Association, vol. 21(3), pages 177-198, Summer.
- Thomas Reardon & C. Peter Timmer & Christopher B. Barrett & Julio Berdegué, 2003. "The Rise of Supermarkets in Africa, Asia, and Latin America," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(5), pages 1140-1146.
- Dries, Liesbeth & Swinnen, Johan F. M., 2004. "Foreign Direct Investment, Vertical Integration, and Local Suppliers: Evidence from the Polish Dairy Sector," World Development, Elsevier, vol. 32(9), pages 1525-1544, September.
- Gavin Cameron, 2005.
"The Sun Also Rises: Productivity Convergence Between Japan and the USA,"
Journal of Economic Growth,
Springer, vol. 10(4), pages 387-408, December.
- Gavin Cameron, 2000. "The Sun Also Rises: Productivity Convergence Between Japan and the USA," Economics Series Working Papers 45, University of Oxford, Department of Economics.
- Benhabib, Jess & Spiegel, Mark M., 2005.
"Human Capital and Technology Diffusion,"
Handbook of Economic Growth,
in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 13, pages 935-966
- Sourafel Girma & Holger Görg & Mauro Pisu, 2008.
"Exporting, linkages and productivity spillovers from foreign direct investment,"
Canadian Journal of Economics,
Canadian Economics Association, vol. 41(1), pages 320-340, February.
- Girma, Sourafel & Görg, Holger & Pisu, Mauro, 2008. "Exporting, linkages and productivity spillovers from foreign direct investment," Open Access Publications from Kiel Institute for the World Economy 4265, Kiel Institute for the World Economy (IfW).
- Girma, Sourafel & Görg, Holger & Pisu, Mauro, 2007. "Exporting, Linkages and Productivity Spillovers from Foreign Direct Investment," CEPR Discussion Papers 6383, C.E.P.R. Discussion Papers.
- Diao, Xinshen & Rattso, Jorn & Stokke, Hildegunn E., 2006. "Learning by exporting and structural change: A Ramsey growth model of Thailand," Journal of Policy Modeling, Elsevier, vol. 28(3), pages 293-306, April.
- Xavier Irz & Terry Roe, 2005. "Seeds of growth? Agricultural productivity and the transitional dynamics of the Ramsey model," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 32(2), pages 143-165, June.
- W. Bruce Traill, 2006. "The Rapid Rise of Supermarkets?," Development Policy Review, Overseas Development Institute, vol. 24(2), pages 163-174, 03.
- Cameron, Gavin & Proudman, James & Redding, Stephen, 2005. "Technological convergence, R&D, trade and productivity growth," European Economic Review, Elsevier, vol. 49(3), pages 775-807, April.
- repec:fip:fedfap:2003-02 is not listed on IDEAS
- Stifel, David C. & Thorbecke, Erik, 2003. "A dual-dual CGE model of an archetype African economy: trade reform, migration and poverty," Journal of Policy Modeling, Elsevier, vol. 25(3), pages 207-235, April.
- Reardon, Thomas & Odera, Michael M. & Neven, David, 2006. "Horticulture Farmers and Domestic Supermarkets in Kenya," Staff Papers 11534, Michigan State University, Department of Agricultural, Food, and Resource Economics.
- Findlay, Ronald, 1978. "Relative Backwardness, Direct Foreign Investment, and the Transfer of Technology: A Simple Dynamic Model," The Quarterly Journal of Economics, MIT Press, vol. 92(1), pages 1-16, February.
- Liesbeth Dries & Thomas Reardon & Johan F. M. Swinnen, 2004. "The Rapid Rise of Supermarkets in Central and Eastern Europe: Implications for the Agrifood Sector and Rural Development," Development Policy Review, Overseas Development Institute, vol. 22, pages 525-556, 09.
- Love, David R. F., 1997. "A dynamic general equilibrium model of industrialization when manufactures are unnecessary," Journal of Development Economics, Elsevier, vol. 54(2), pages 357-385, December.
- Vandeplas, Anneleen & Minten, Bart & Swinnen, Johan F.M., 2012.
"Multinationals versus cooperatives: The income and efficiency effects of supply chain governance in India,"
2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil
126892, International Association of Agricultural Economists.
- Vandeplas, Anneleen, 2011. "Multinationals or Cooperatives: Does it Matter to Farmers? - A Study of the Dairy Sector in Punjab (India)," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 115545, European Association of Agricultural Economists.
- Riungu, Claris Karimi, 2011. "Effects of Supermarkets on Fresh Fruit and Vegetables Small-Scale Farmers in Central Kenya," Research Theses 134484, Collaborative Masters Program in Agricultural and Applied Economics.
- Wells, Patricia Bryn & Saghaian, Sayed H. & Osborne, William, 2013. "The Expansion of Food Retail in Developing Countries and Its Effects on the Hunger Index," 2013 Annual Meeting, February 2-5, 2013, Orlando, Florida 142630, Southern Agricultural Economics Association.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marit Balstad Jensen) The email address of this maintainer does not seem to be valid anymore. Please ask Marit Balstad Jensen to update the entry or send us the correct address.
If references are entirely missing, you can add them using this form.