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Transactions Costs And Agricultural Productivity: Implications Of Isolation For Rural Poverty In Madagascar

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  • Stifel, David
  • Minten, Bart
  • Dorosh, Paul A.

Abstract

This paper examines the mechanisms that transmit isolation into poverty in Madagascar using household survey data combined with a census of administrative communes. Given the importance of agriculture to the rural poor, where nine out of ten poor persons is engaged in farming, we concentrate on isolation manifesting itself in the form of high transaction costs such as the cost of transporting agricultural commodities to major market centers. We find that (a) the incidence of poverty in rural Madagascar increases with remoteness; (b) yields of major staple crops fall considerably as one gets farther away from major markets; (c) and the use of agricultural inputs declines with isolation. Simulation results using output from rice production function estimates suggest that halving travel time per kilometer on major highways (feeder roads) will increase primary season rice production by 1.3 (1.0) percent.

Suggested Citation

  • Stifel, David & Minten, Bart & Dorosh, Paul A., 2003. "Transactions Costs And Agricultural Productivity: Implications Of Isolation For Rural Poverty In Madagascar," MSSD Discussion Papers 16221, CGIAR, International Food Policy Research Institute (IFPRI).
    • Handle: RePEc:ags:iffp11:16221
    DOI: 10.22004/ag.econ.16221
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    Cited by:

    1. Joshi, Pramod Kumar & Gulati, Ashok & Birthal, Pratap Singh & Tewari, Laxmi, 2003. "Agriculture diversification in South Asia: patterns, determinants, and policy implications," MSSD discussion papers 57, International Food Policy Research Institute (IFPRI).
    2. Cadot, Olivier & Dutoit, Laure & Olarreaga, Marcelo, 2006. "How costly is it for poor farmers to lift themselves out of poverty?," Policy Research Working Paper Series 3881, The World Bank.
    3. Cadot, Olivier & Olarreaga, Marcelo & Dutoit, Laure, 2005. "How Costly is it for Poor Farmers to Lift Themselves out of Subsistence?," CEPR Discussion Papers 5392, Centre for Economic Policy Research.
    4. Gina Porter, 2007. "Transport planning in sub-Saharan Africa," Progress in Development Studies, , vol. 7(3), pages 251-257, July.
    5. Christian K.M. Kingombe, 2012. "The Linkage between Outcome Differences in Cotton Production and Rural Roads Improvements - A Matching Approach," IHEID Working Papers 12-2012, Economics Section, The Graduate Institute of International Studies.
    6. Singh, Shivendu Shekhar & Sarkar, Basudatta, 2022. "Transport accessibility and affordability as the determinant of non-motorized commuting in rural India," Transport Policy, Elsevier, vol. 118(C), pages 101-111.
    7. Huang, Xiaoyan & Xia, Yifan & Yin, Chun, 2024. "Associations between the built environment and travel to higher-order centers in Chinese rural areas," Journal of Transport Geography, Elsevier, vol. 119(C).
    8. Rios, Ana R. & Masters, William A. & Shively, Gerald E., 2008. "Linkages between Market Participation and Productivity: Results from a Multi-Country Farm Household Sample," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6145, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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