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The extent of the market and stages of agricultural specialization

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  • M. Shahe Emran
  • Forhad Shilpi

Abstract

This paper provides empirical evidence of an U-shaped causal relationship between the extent of the market (size of the relevant urban market) and the pattern of crop specialization in a village economy. We use the recent two-stage estimator developed by Lewbel (2012) and exploit heteroscedasticity for identification. The results suggest that the portfolio of crops in a village economy becomes more diversified initially as the extent of the market increases. However, after the market size reaches a threshold, the production structure starts to specialize again. This evidence on the stages of agricultural diversification is consistent with the stages of diversification identified in the recent literature for the economy as a whole and also for the manufacturing sector.

Suggested Citation

  • M. Shahe Emran & Forhad Shilpi, 2012. "The extent of the market and stages of agricultural specialization," Canadian Journal of Economics, Canadian Economics Association, vol. 45(3), pages 1125-1153, August.
    • Handle: RePEc:cje:issued:v:45:y:2012:i:3:p:1125-1153
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    References listed on IDEAS

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    1. Sebnem Kalemli-Ozcan & Bent E. Sørensen & Oved Yosha, 2003. "Risk Sharing and Industrial Specialization: Regional and International Evidence," American Economic Review, American Economic Association, vol. 93(3), pages 903-918, June.
    2. Arthur Lewbel, 2010. "Using Heteroscedasticity to Identify and Estimate Mismeasured and Endogenous Regressor Models," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 30(1), pages 67-80, December.
    3. Jean Imbs & Romain Wacziarg, 2003. "Stages of Diversification," American Economic Review, American Economic Association, vol. 93(1), pages 63-86, March.
    4. Douglas Gollin & Stephen Parente & Richard Rogerson, 2002. "The Role of Agriculture in Development," American Economic Review, American Economic Association, vol. 92(2), pages 160-164, May.
    5. Gollin, Douglas & Parente, Stephen L. & Rogerson, Richard, 2007. "The food problem and the evolution of international income levels," Journal of Monetary Economics, Elsevier, vol. 54(4), pages 1230-1255, May.
    6. Kuznets, Simon, 1973. "Modern Economic Growth: Findings and Reflections," American Economic Review, American Economic Association, vol. 63(3), pages 247-258, June.
    7. Jacoby, Hanan C, 2000. "Access to Markets and the Benefits of Rural Roads," Economic Journal, Royal Economic Society, vol. 110(465), pages 713-737, July.
    8. Francisco Alcalá & Antonio Ciccone, 2003. "Trade, extent of the market and economic growth 1960-1996," Economics Working Papers 765, Department of Economics and Business, Universitat Pompeu Fabra, revised Dec 2003.
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    Citations

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    Cited by:

    1. Emran, M. Shahe & Shilpi, Forhad, 2015. "Gender, Geography, and Generations: Intergenerational Educational Mobility in Post-Reform India," World Development, Elsevier, vol. 72(C), pages 362-380.
    2. Nga Thi Viet Nguyen & Felipe F. Dizon, 2017. "The Geography of Welfare in Benin, Burkina Faso, Côte d'Ivoire, and Togo," World Bank Other Operational Studies 27994, The World Bank.
    3. Higashikata, Takayuki & Hashiguchi, Yoshihiro, 2017. "The causal effect of urbanization on rural poverty reduction: quasi-experimental evidence using Indonesian urban area data," IDE Discussion Papers 673, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    4. Awaworyi Churchill, Sefa & Smyth, Russell, 2017. "Ethnic Diversity and Poverty," World Development, Elsevier, vol. 95(C), pages 285-302.
    5. Brown, Timothy Tyler, 2014. "How effective are public health departments at preventing mortality?," Economics & Human Biology, Elsevier, vol. 13(C), pages 34-45.
    6. repec:eee:ecmode:v:68:y:2018:i:c:p:475-483 is not listed on IDEAS
    7. Piekalkiewicz, Marcin, 2016. "Money, Social Capital and Materialism. Evidence from Happiness Data," EconStor Preprints 130185, ZBW - German National Library of Economics.
    8. repec:bla:obuest:v:79:y:2017:i:5:p:747-768 is not listed on IDEAS
    9. Berg, Claudia & Emran, M. Shahe & Shilpi, Forhad, 2013. "Microfinance and moneylenders : long-run effects of MFIs on informal credit market in Bangladesh," Policy Research Working Paper Series 6619, The World Bank.
    10. Seuring, Till & Goryakin, Yevgeniy & Suhrcke, Marc, 2015. "The impact of diabetes on employment in Mexico," Economics & Human Biology, Elsevier, vol. 18(C), pages 85-100.
    11. Emran, M. Shahe & Shilpi, Forhad, 2014. "Land Market Restrictions, Women's Labor Force Participation and Wages," MPRA Paper 57989, University Library of Munich, Germany.
    12. Claudia N. Berg & Uwe Deichmann & Yishen Liu & Harris Selod, 2017. "Transport Policies and Development," Journal of Development Studies, Taylor & Francis Journals, vol. 53(4), pages 465-480, April.
    13. Yang, Dan & Liu, Zimin, 2012. "Does farmer economic organization and agricultural specialization improve rural income? Evidence from China," Economic Modelling, Elsevier, vol. 29(3), pages 990-993.
    14. Wendy J. Umberger & Xiaobo He & Nicholas Minot & Hery Toiba, 2015. "Examining the Relationship between the Use of Supermarkets and Over-nutrition in Indonesia," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(2), pages 510-525.
    15. Kesavayuth, Dusanee & Zikos, Vasileios, 2016. "Does well-being help you with unemployment?," MPRA Paper 71918, University Library of Munich, Germany.
    16. M. Shahe Emran & Forhad Shilpi, 2017. "Land Market Restrictions, Women's Labour Force Participation and Wages in a Rural Economy," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 79(5), pages 747-768, October.
    17. Awaworyi Churchill, Sefa & Smyth, Russell, 2017. "Friendship network composition and subjective wellbeing," EconStor Preprints 158003, ZBW - German National Library of Economics.
    18. Emran, M. Shahe & Shilpi, Forhad, 2015. "Do Land Market Restrictions Hinder Structural Change in a Rural Economy? Evidence from Sri Lanka," MPRA Paper 66017, University Library of Munich, Germany.
    19. repec:eee:ecmode:v:64:y:2017:i:c:p:465-472 is not listed on IDEAS
    20. repec:spr:empeco:v:53:y:2017:i:4:d:10.1007_s00181-016-1174-5 is not listed on IDEAS

    More about this item

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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