Agricultural Technology Choice and Transport

This article seeks to address an old and recurring theme in development economics—the slow adoption of new technologies by farmers in many developing countries. We explore a somewhat novel explanation for this puzzle—the link between market access and the incentives to adopt a new technology when there are non-convexities. We develop a theoretical model to guide the empirical analysis that uses spatially disaggregated agricultural production data from the International Food Policy Research Institute and Living Standards Measurement Study survey data for Nigeria. We estimate the impact of transport costs on crop production, adoption of modern technologies, and the differential impact on returns of modern versus traditional farmers. To overcome the limitation of data availability on travel costs for much of Africa, we combine road survey data and GIS roads networks to generate the most thorough and accurate road network available, to our knowledge. Using these data and the Highway Development Management Model (HDM-4), we compute minimum travel costs from each location to the market. Consistent with our theory we find that transportation costs are critical in determining technology choices, with a greater responsiveness among farmers who adopt modern technologies, and at times a perverse (negative) response to lower transport costs among those who employ more traditional techniques. In sum, we present compelling evidence that the constraints to the adoption of modern technologies and access to markets are interconnected, and so should be targeted jointly.