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Distortions to Agriculture and Economic Growth in Sub-Saharan Africa

  • Anderson, Kym
  • Bruckner, Markus

To what extent has Sub-Saharan Africa’s slow economic growth over the past five decades been due to price and trade policies that discouraged production of agricultural relative to non-agricultural tradables? This paper uses a new set of estimates of policy induced distortions to relative agricultural prices to address this question econometrically. We first test if these policy distortions respond to economic growth, using rainfall and international commodity price shocks as instrumental variables. We find that on impact there is no significant response of relative agricultural price distortions to changes in real GDP per capita growth. We then test the reverse proposition and find a statistically significant and sizable negative effect of relative agricultural price distortions on the growth rate of Sub-Saharan African countries. Our fixed effects estimates yield that, during the 1960-2005 period, a ten percentage points increase in distortions to relative agricultural prices decreased the region’s real GDP per capita growth rate by about half a percentage point per annum.

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File URL: http://purl.umn.edu/124908
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Paper provided by Agricultural and Applied Economics Association in its series 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington with number 124908.

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Date of creation: Jun 2012
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Handle: RePEc:ags:aaea12:124908
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  1. Alcala, Francisco & Ciccone, Antonio, 2001. "Trade and Productivity," CEPR Discussion Papers 3095, C.E.P.R. Discussion Papers.
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  3. Philippe Aghion & Mathias Dewatripont & Luosha Du & Ann Harrison & Patrick Legros, 2012. "Industrial Policy and Competition," NBER Working Papers 18048, National Bureau of Economic Research, Inc.
  4. Anderson, Kym & Croser, Johanna L., 2010. "Agricultural Distortions in Sub-Saharan Africa: Trade and Welfare Indicators, 1961 to 2004," CEPR Discussion Papers 7747, C.E.P.R. Discussion Papers.
  5. Sandri, Damiano & Valenzuela, Ernesto & Anderson, Kym, 2007. "Economic And Trade Indicators For Asia, 1960 To 2004," Agricultural Distortions Working Paper 48435, World Bank.
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  11. Collier, Paul & Goderis, Benedikt, 2008. "Commodity Prices, Growth, and the Natural Resource Curse: Reconciling a Conundrum," MPRA Paper 17315, University Library of Munich, Germany.
  12. Ciccone, Antonio & Jarocinski, Marek, 2007. "Determinants of Economic Growth: Will Data Tell?," CEPR Discussion Papers 6544, C.E.P.R. Discussion Papers.
  13. Butzer, Rita & Mundlak, Yair & Larson, Donald F., 2010. "Measures of fixed capital in agriculture," Policy Research Working Paper Series 5472, The World Bank.
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  26. Salvador Barrios & Luisito Bertinelli & Eric Strobl, 2010. "Trends in Rainfall and Economic Growth in Africa: A Neglected Cause of the African Growth Tragedy," The Review of Economics and Statistics, MIT Press, vol. 92(2), pages 350-366, May.
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