Transport Policy and Agricultural Productivity and Production in Ethiopia

Transport policy boosts agricultural production and productivity in developing countries like Ethiopia. It increases timely mobility of agricultural inputs that result in a better information diffusion and technology transfer from points of origin to points of utilization and high level of adoption of modern agricultural inputs. This paper examines the effect of transport policy, road, and transport and communication infrastructures on agricultural productivity and production using the Autoregressive Distributed Lag (ARDL) bounds test for co-integration during the period of 1991 to 2018. The result indicates that the transport policy has a more significant effect on agricultural productivity and production as compared to the base scenario. The model results reveal the existence of significant and positive impact of transport policy, road, and transport and communication on agricultural production and productivity in the long run, but no such effect in the short-run. The results identify the existence of significant unidirectional causality running from agricultural production and productivity to road construction, and transport and communication development for all lagged years. There is no causality running from expansion of road construction to agricultural output growth with the one-three years time lagged. The long-run impact of infrastructure development on agricultural production and productivity is observed with the four and five years time lagged in this study. The long-run effects of road, and transport and communication on agricultural production and productivity can only be manifested with a time lag of four and five years. The government has some time buffer to put proper transport policies into action, and to invest into the road, transport and communication infrastructure in order to increase agricultural production and productivity. This is important findings that have imperative policy implications for government that transport policies could increase road accesses and connectivity to major road networks, movement of agricultural products and industrial raw materials from production/surplus areas to market places/deficit areas. Finally, implementation of transport policies along with agricultural policies could ensure a more significant effect on agricultural productivity and production since agricultural growth and infrastructural development reinforce each other, as evidenced by the results of this study.