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Market and Coordination Failures in Poor Rural Economies: Policy Implications for Agricultural and Rural Development


  • Dorward, Andrew
  • Kydd, Jonathan
  • Poulton, Colin


This paper argues that the disappointing outcomes of adjustment policies in poor rural economies, principally in sub-Saharan Africa, can be partly attributed to weaknesses in the neo-classical theory which underlies these polices and from associated failures to recognise structural changes (or transitions) in growing agricultural economies. After a brief description of agricultural policy changes in sub Saharan Africa, the mixed achievements of market liberalisation policies are explained using new institutional economic arguments regarding inherent difficulties in economic coordination in poor economies, difficulties which markets themselves cannot overcome. A novel framework is put forward for understanding coordination failure and integrating it with other causes of under-development notably low levels of technical and institutional development and poor governance. The paper concludes by considering the implications of these arguments for development policies in different sub-Saharan economies.

Suggested Citation

  • Dorward, Andrew & Kydd, Jonathan & Poulton, Colin, 2004. "Market and Coordination Failures in Poor Rural Economies: Policy Implications for Agricultural and Rural Development," 2004 Inaugural Symposium, December 6-8, 2004, Nairobi, Kenya 9535, African Association of Agricultural Economists (AAAE).
  • Handle: RePEc:ags:aaaeke:9535

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    References listed on IDEAS

    1. Block, Steven A., 1995. "The recovery of agricultural productivity in sub-Saharan Africa," Food Policy, Elsevier, vol. 20(5), pages 385-405, October.
    2. Gaur, Sanjay, 1997. "Adelman and Morris factor analysis of developing countries," Journal of Policy Modeling, Elsevier, vol. 19(4), pages 407-415, August.
    3. de Meza, David & Gould, J R, 1992. "The Social Efficiency of Private Decisions to Enforce Property Rights," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 561-580, June.
    4. Poulton, Colin & Gibbon, Peter & Hanyani-Mlambo, Benjamine & Kydd, Jonathan & Maro, Wilbald & Larsen, Marianne Nylandsted & Osorio, Afonso & Tschirley, David & Zulu, Ballard, 2004. "Competition and Coordination in Liberalized African Cotton Market Systems," World Development, Elsevier, vol. 32(3), pages 519-536, March.
    5. Jonathan Kydd & Andrew Dorward, 2004. "Implications of market and coordination failures for rural development in least developed countries," Journal of International Development, John Wiley & Sons, Ltd., vol. 16(7), pages 951-970.
    6. Jayne, T. S. & Govereh, J. & Mwanaumo, A. & Nyoro, J. K. & Chapoto, A., 2002. "False Promise or False Premise? The Experience of Food and Input Market Reform in Eastern and Southern Africa," World Development, Elsevier, vol. 30(11), pages 1967-1985, November.
    7. Adelman, Irma & Morris, Cynthia Taft, 1997. "Editorial: Development history and its implications for development theory," World Development, Elsevier, vol. 25(6), pages 831-840, June.
    8. Hall, Peter A. & Soskice, David (ed.), 2001. "Varieties of Capitalism: The Institutional Foundations of Comparative Advantage," OUP Catalogue, Oxford University Press, number 9780199247752, June.
    9. Andrew Dorward, 2001. "The Effects of Transaction Costs, Power and Risk on Contractual Arrangements: A Conceptual Framework for Quantitative Analysis," Journal of Agricultural Economics, Wiley Blackwell, vol. 52(2), pages 59-73.
    10. Jayne, T. S. & Jones, Stephen, 1997. "Food marketing and pricing policy in Eastern and Southern Africa: A survey," World Development, Elsevier, vol. 25(9), pages 1505-1527, September.
    11. Kherallah, Mylène & Delgado, Christopher L. & Gabre-Madhin, Eleni Z. & Minot, Nicholas & Johnson, Michael, 2000. "The road half traveled," Issue briefs 2, International Food Policy Research Institute (IFPRI).
      • Kherallah, Mylène & Delgado, Christopher L. & Gabre-Madhin, Eleni Z. & Minot, Nicholas. & Johnson, Michael., 2000. "The road half traveled," Food policy reports 10, International Food Policy Research Institute (IFPRI).
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    Cited by:

    1. Delpeuch, Claire & Vandeplas, Anneleen, 2013. "Revisiting the “Cotton Problem”—A Comparative Analysis of Cotton Reforms in Sub-Saharan Africa," World Development, Elsevier, vol. 42(C), pages 209-221.
    2. Delpeuch, Claire & Leblois, Antoine, 2014. "The Elusive Quest for Supply Response to Cash-Crop Market Reforms in Sub-Saharan Africa: The Case of Cotton," World Development, Elsevier, vol. 64(C), pages 521-537.
    3. Ahmed, Mohamed M. & Balie, Jean, 2016. "Why is it important to measure the Market Development Gap? An application to the agricultural sector of Uganda," 2016 AAAE Fifth International Conference, September 23-26, 2016, Addis Ababa, Ethiopia 246446, African Association of Agricultural Economists (AAAE).

    More about this item


    development; coordination; markets; institutions; Marketing; O12; O17; Q12;

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets


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