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Information Networks in Dynamic Agrarian Economies


  • Munshi, Kaivan


Over the past 50 years, people living in developing countries have gained access to technologies, such as high yielding agricultural seed varieties and modern medicine, that have the potential to dramatically alter the quality of their lives. Although the adoption of these technologies has increased wealth and lowered mortality in many parts of the world, their uptake has been uneven. The traditional explanation for the observed differences in the response to new opportunities, across and within countries, is based on heterogeneity in the population. An alternative explanation, which has grown in popularity in recent years is based on the idea that individuals are often uncertain about the returns from a new technology. For example, farmers might not know the (expected) yield that will be obtained from a new and uncertain technology and young mothers might be concerned about the side effects from a new contraceptive. In these circumstances, a neighbor's decision to use a new technology indicates that she must have received a favorable signal about its quality and her subsequent experience with it serves as an additional source of information. Because information must flow sequentially from one neighbor to the next, social learning provides a natural explanation for the gradual diffusion of new technology even in a homogeneous population. Social learning can also explain the wide variation in the response to external interventions across otherwise identical communities, simply as a consequence of the randomness in the information signals that they received. Recent research described in this chapter indicates that social learning can play an important role in the adoption of new agricultural technology, the fertility transition, and investments in health and education in developing countries.

Suggested Citation

  • Munshi, Kaivan, 2008. "Information Networks in Dynamic Agrarian Economies," Handbook of Development Economics, Elsevier.
  • Handle: RePEc:eee:devchp:5-48

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    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Martine AUDIBERT, 2008. "Endemic diseases and agricultural productivity: Challenges and policy response," Working Papers 200823, CERDI.
    2. Takeshima, Hiroyuki & Agandin, John & Kolavalli, Shashidhara, 2017. "Growth of modern service providers for the African agricultural sector: An insight from a public irrigation scheme in Ghana," IFPRI discussion papers 1678, International Food Policy Research Institute (IFPRI).
    3. Guirkinger, Catherine & Platteau, Jean-Philippe, 2019. "The dynamics of family systems: lessons from past and present times," CEPR Discussion Papers 13570, C.E.P.R. Discussion Papers.
    4. Thomas Barré, 2010. "Overemployment, Underemployment and the opportunity cost of time," Working Papers halshs-00452809, HAL.
    5. Islam, Asadul & Ushchev, Philip & Zenou, Yves & Zhang, Xin, 2018. "The Value of Information in Technology Adoption: Theory and Evidence from Bangladesh," CEPR Discussion Papers 13419, C.E.P.R. Discussion Papers.

    More about this item


    social learning; technology adoption;

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration


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