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The Impact of Infrastructure on Agricultural Productivity

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  • Llanto, Gilberto M.
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    Abstract

    Recent literature indicates the significant role played by rural infrastructure in improving agricultural productivity in developing economies. While the availability and quality of rural infrastructure are never substitutes to efficient macroeconomic and agriculture-specific policies and the effective implementation of such policies, inadequate infrastructure can be a significant constraint to growth and productivity. Rural infrastructure, like other public investments, raises agricultural productivity, which in turn induces growth in the rural areas, bringing about higher agricultural wages and improved opportunities for nonfarm labor. The rise in agricultural productivity, which reduces food prices, benefits both urban and rural inhabitants who are net food buyers. Thus, aside from its growth benefits, agricultural productivity has significant poverty-reduction effects. The paper`s overall empirical results indicate a significant link between rural infrastructure and agricultural productivity. Electricity and roads are significant determinants of agricultural productivity. This is consistent with a related finding on the constraints imposed on growth by inadequate infrastructure. Rural roads provide the important connectivity with growing markets adjacent to rural areas; they also lessen input costs and transaction costs of rural producers and consumers. Access to electricity creates various income-earning opportunities for rural households.

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    Bibliographic Info

    Paper provided by Philippine Institute for Development Studies in its series Discussion Papers with number DP 2012-12.

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    Length: 54
    Date of creation: 2012
    Date of revision:
    Handle: RePEc:phd:dpaper:dp_2012-12

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    Keywords: agricultural productivity; poverty reduction; rural infrastructure; transaction costs; connectivity; regional convergence;

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    1. Douglas Gollin & Stephen Parente & Richard Rogerson, 2002. "The Role of Agriculture in Development," American Economic Review, American Economic Association, American Economic Association, vol. 92(2), pages 160-164, May.
    2. Ravallion, Martin & Datt, Gaurav, 1996. "How Important to India's Poor Is the Sectoral Composition of Economic Growth?," World Bank Economic Review, World Bank Group, World Bank Group, vol. 10(1), pages 1-25, January.
    3. Llanto, Gilberto M., 2008. "A Review of Build-Operate-Transfer for Infrastructure Development: Some Lessons for Policy Reform," Discussion Papers, Philippine Institute for Development Studies DP 2008-25, Philippine Institute for Development Studies.
    4. Gilberto M. Llanto, 2008. "A Review of Build-Operate-Transfer for Infrastructure Development : Some Lessons for Policy Reform," Development Economics Working Papers 22655, East Asian Bureau of Economic Research.
    5. Barbara J. Craig & Philip G. Pardey & Johannes Roseboom, 1997. "International Productivity Patterns: Accounting for Input Quality, Infrastructure, and Research," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 79(4), pages 1064-1076.
    6. Fan, Shenggen & Zhang, Linxiu & Zhang, Xiaobo, 2002. "Growth, inequality, and poverty in rural China: the role of public investments," Research reports, International Food Policy Research Institute (IFPRI) 125, International Food Policy Research Institute (IFPRI).
    7. Shenggen Fan & Peter Hazell & Sukhadeo Thorat, 2000. "Government Spending, Growth and Poverty in Rural India," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 82(4), pages 1038-1051.
    8. Arsenio M. Balisacan & Ernesto M. Pernia, 2001. "Probing Beneath Cross-National Averages: Poverty, Inequality, and Growth in the Philippines," UP School of Economics Discussion Papers, University of the Philippines School of Economics 200111, University of the Philippines School of Economics.
    9. Datt, Gaurav & Ravallion, Martin, 1998. "Why Have Some Indian States Done Better Than Others at Reducing Rural Poverty?," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 65(257), pages 17-38, February.
    10. Balisacan, Arsenio M. & Fuwa, Nobuhiko, 2004. "Going beyond Crosscountry Averages: Growth, Inequality and Poverty Reduction in the Philippines," World Development, Elsevier, Elsevier, vol. 32(11), pages 1891-1907, November.
    11. Binswanger, Hans P. & Khandker, Shahidur R & Rosenzweig, Mark R., 1989. "How infrastructure and financial institutions affect agricultural output and investment in India," Policy Research Working Paper Series 163, The World Bank.
    12. Mundlack, Yair & Larson, Donald F. & Butzer, Rita, 2002. "Determinants of agricultural growth in Indonesia, the Philippines, and Thailand," Policy Research Working Paper Series 2803, The World Bank.
    13. Teruel, Romeo G. & Kuroda, Yoshimi, 2005. "Public infrastructure and productivity growth in Philippine agriculture, 1974-2000," Journal of Asian Economics, Elsevier, Elsevier, vol. 16(3), pages 555-576, June.
    14. Hazell, P. B. R. & Roell, Ailsa, 1983. "Rural growth linkages: household expenditure patterns in Malaysia and Nigeria," Research reports, International Food Policy Research Institute (IFPRI) 41, International Food Policy Research Institute (IFPRI).
    15. Delgado, Christopher L. & Hopkins, Jane & Kelly , Valerie & Hazell, P. B. R. & McKenna, Anna A. & Gruhn, Peter & Hojjati, Behjat & Sil, Jayashree & Courbois, Claude, 1998. "Agricultural growth linkages in Sub-Saharan Africa:," Research reports, International Food Policy Research Institute (IFPRI) 107, International Food Policy Research Institute (IFPRI).
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    Cited by:
    1. Briones, Roehlano M., 2013. "Impact Assessment of the Agricultural Production Support Services of the Department of Agriculture on the Income of Poor Farmers/Fisherfolk: Review of the Evidence," Discussion Papers, Philippine Institute for Development Studies DP 2013-23, Philippine Institute for Development Studies.

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