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Why liberalization alone has not improved agricultural productivity in Zambia : the role of asset ownership and working capital constraints

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  • Deininger, Klaus
  • Olinto, Pedro

Abstract

The authors use a large panel data set from Zambia to examine factors that could explain the relatively lackluster performance of the country's agricultural sector after liberalization. Zambia's liberalization significantly opened the economy but failed to alter the structure of productionor help realize efficiency gains. They reach two main conclusions. First, not owning productive assets (in Zambia, draft animals and implements) limits improvements in agricultural productivity and household welfare. Owning oxen increases income directly, allows farmers to till their fields efficiently when rain is delayed, increases the area cultivated, and improves access to credit and fertilizer markets. Second, the authors reject the hypothesis that the application of fertilizer is unprofitable because of high input prices. Rather, fertilizer use appears to have declined because of constraints on supplies, which government intervention exacerbated instead of alleviating. (Extending the use of fertilizer to the many producers not currently using it would be profitable, but increasing the amount applied by the few producers who now have access to it would not be.) Policies to foster accumulation of the assets needed for agricultural production (including draft animals and implements) and to provide complementary public goods (education, credit, and good agricultural extension services) could greatly help reduce poverty and improve productivity.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2302.

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Date of creation: 31 Mar 2000
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Handle: RePEc:wbk:wbrwps:2302

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Keywords: Economic Theory&Research; Environmental Economics&Policies; Labor Policies; Banks&Banking Reform; Agricultural Knowledge&Information Systems; Environmental Economics&Policies; Economic Theory&Research; Banks&Banking Reform; Agricultural Knowledge&Information Systems; Agricultural Research;

References

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  1. Alwang, Jeffrey & Siegel, Paul B. & Jorgensen, Steen L., 1996. "Seeking guidelines for poverty reduction in rural Zambia," World Development, Elsevier, Elsevier, vol. 24(11), pages 1711-1723, November.
  2. Hattink, Wolter & Heerink, Nico & Thijssen, Geert, 1998. "Supply Response of Cocoa in Ghana: A Farm-Level Profit Function Analysis," Journal of African Economies, Centre for the Study of African Economies (CSAE), Centre for the Study of African Economies (CSAE), vol. 7(3), pages 424-44, October.
  3. Honore, Bo E, 1992. "Trimmed LAD and Least Squares Estimation of Truncated and Censored Regression Models with Fixed Effects," Econometrica, Econometric Society, Econometric Society, vol. 60(3), pages 533-65, May.
  4. Gourieroux, Christian & Monfort, Alain, 1993. "Simulation-based inference : A survey with special reference to panel data models," Journal of Econometrics, Elsevier, Elsevier, vol. 59(1-2), pages 5-33, September.
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Citations

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Cited by:
  1. Neil McCulloch & Bob Baulch & Milasoa Cherel-Robson, 2000. "Poverty, Inequality and Growth in Zambia during the 1990s," Econometrics, EconWPA 0004004, EconWPA.
  2. Abbink, Klaus & Jayne, Thomas S. & Moller, Lars C., 2008. "The relevance of a rules-based maize marketing policy : an experimental case study of Zambia," Policy Research Working Paper Series 4727, The World Bank.
  3. Jean-Louis Arcand & Béatrice D'Hombres, 2011. "Testing for Separation in Agricultural Household Models and Unobservable Household-Specific Effects," Working Papers halshs-00557188, HAL.
  4. Chloupkova, Jarka & Bjornskov, Christian, 2001. "Reaping the Gains from Trade: Constraints and Opportunities of Agricultural Credit Markets," Unit of Economics Working papers, Royal Veterinary and Agricultural University, Food and Resource Economic Institute 24189, Royal Veterinary and Agricultural University, Food and Resource Economic Institute.
  5. Crawford, Eric W. & Jayne, Thomas S. & Kelly, Valerie A., 2005. "Alternative Approaches for Promoting Fertilizer Use in Africa, with Particular Reference to the Role of Fertilizer Subsidies," Staff Papers, Michigan State University, Department of Agricultural, Food, and Resource Economics 11557, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  6. Mwangi wa Githinji & Charalampos Konstantinidis & Andrew Barenberg, 2011. "Small and as Productive : Female Headed Households and the Inverse Relationship between Land Size and Output in Kenya," UMASS Amherst Economics Working Papers, University of Massachusetts Amherst, Department of Economics 2011-31, University of Massachusetts Amherst, Department of Economics.
  7. Wobst, Peter & Thurlow, James, 2005. "The Road to Pro-Poor Growth in Zambia: Past Lessons and Future Challenges," Proceedings of the German Development Economics Conference, Kiel 2005 37, Verein für Socialpolitik, Research Committee Development Economics.
  8. Bussolo, Maurizio & Niimi, Yoko, 2006. "Do regional trade pacts benefit the poor ? An illustration from the Dominican Republic-Central American Free Trade Agreement in Nicaragua," Policy Research Working Paper Series 3850, The World Bank.
  9. Gamba, Paul & Mghenyi, Elliot W., 2005. "Rural Poverty Dynamics, Agricultural Productivity and Access to Resources," Food Security Collaborative Working Papers, Michigan State University, Department of Agricultural, Food, and Resource Economics 55165, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  10. Massuanganhe, Israel Jacob, 2008. "Policies, Natural Resource Governance and Local Development," Ph.D Degree Theses, University of the Free State, Department of Agricultural Economics 53061, University of the Free State, Department of Agricultural Economics.
  11. Mellado, Aida Gonzalez, 2006. "Possibilities And Perspectives Of Integrating Household Analysis In Cge Models: The Case Of Mexico," 46th Annual Conference, Giessen, Germany, October 4-6, 2006, German Association of Agricultural Economists (GEWISOLA) 14970, German Association of Agricultural Economists (GEWISOLA).
  12. Dorward, Andrew & Fan, Shenggen & Kydd, Jonathan & Lofgren, Hans & Morrison, Jamie & Poulton, Colin & Rao, Neetha & Smith, Laurence & Tchale, Hardwick & Thorat, Sukhadeo & Urey, Ian & Wobst, Peter, 2004. "Institutions and economic policies for pro-poor agricultural growth," DSGD discussion papers, International Food Policy Research Institute (IFPRI) 15, International Food Policy Research Institute (IFPRI).
  13. World Bank, 2007. "Zambia : Smallholder Agricultural Commercialization Strategy," World Bank Other Operational Studies 8039, The World Bank.

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