IDEAS home Printed from https://ideas.repec.org/p/fpr/ifprid/932.html
   My bibliography  Save this paper

Rich consumers and poor producers: Quality and rent distribution in global value chains

Author

Listed:
  • Swinnen, Johan F.M.
  • Vandeplas, Anneleen

Abstract

Quality standards are rapidly gaining importance as a result of increasingly globalized trade. Rich country quality requirements are said to have detrimental effects on poor producers in developing countries because they would introduce new trade barriers, prevent small and poor producers from participating in high quality supply chains, and allow multinationals to extract rents. We analyze under which conditions the introduction of quality standards in global value chains may benefit poor producers in developing countries, taking explicitly into account key characteristics of these value chains. We investigate the effects of competition and development and discuss a series of policy implications.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Swinnen, Johan F.M. & Vandeplas, Anneleen, 2009. "Rich consumers and poor producers: Quality and rent distribution in global value chains," IFPRI discussion papers 932, International Food Policy Research Institute (IFPRI).
  • Handle: RePEc:fpr:ifprid:932
    as

    Download full text from publisher

    File URL: http://www.ifpri.org/sites/default/files/publications/ifpridp00932.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Svejnar, Jan, 1986. "Bargaining Power, Fear of Disagreement, and Wage Settlements: Theory and Evidence from U.S. Industry," Econometrica, Econometric Society, vol. 54(5), pages 1055-1078, September.
    2. M. Ataman Aksoy & John C. Beghin, 2005. "Global Agricultural Trade and Developing Countries," World Bank Publications, The World Bank, number 7464.
    3. Hart, Oliver & Moore, John, 1990. "Property Rights and the Nature of the Firm," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1119-1158, December.
    4. John W. Budd & Jozef Konings & Matthew J. Slaughter, 2005. "Wages and International Rent Sharing in Multinational Firms," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 73-84, February.
    5. Dollar, David & Kraay, Aart, 2002. "Growth Is Good for the Poor," Journal of Economic Growth, Springer, vol. 7(3), pages 195-225, September.
    6. Nash, John, 1953. "Two-Person Cooperative Games," Econometrica, Econometric Society, vol. 21(1), pages 128-140, April.
    7. repec:oup:revage:v:30:y:2008:i:3:p:460-468. is not listed on IDEAS
    8. Paul Brenton & Miriam Manchin, 2003. "Making EU Trade Agreements Work: The Role of Rules of Origin," The World Economy, Wiley Blackwell, vol. 26(5), pages 755-769, May.
    9. Elizabeth M. M. Q. Farina & Thomas Reardon, 2000. "Agrifood Grades and Standards in the Extended Mercosur: Their Role in the Changing Agrifood System," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(5), pages 1170-1176.
    10. Birthal, Pratap S. & Joshi, P. K. & Gulati, Ashok, 2005. "Vertical coordination in high-value commodities," MTID discussion papers 85, International Food Policy Research Institute (IFPRI).
    11. Patricia Augier & Michael Gasiorek & Charles Lai Tong, 2005. "The impact of rules of origin on trade flows," Economic Policy, CEPR;CES;MSH, vol. 20(43), pages 567-624, July.
    12. Dhillon, Amrita & Rigolini, Jamele, 2011. "Development and the interaction of enforcement institutions," Journal of Public Economics, Elsevier, vol. 95(1), pages 79-87.
    13. L. ALAN WINTERS & NEIL McCULLOCH & ANDREW McKAY, 2015. "Trade Liberalization and Poverty: The Evidence So Far," World Scientific Book Chapters,in: Non-Tariff Barriers, Regionalism and Poverty Essays in Applied International Trade Analysis, chapter 14, pages 271-314 World Scientific Publishing Co. Pte. Ltd..
    14. Dries, Liesbeth & Germenji, Etleva & Noev, Nivelin & Swinnen, Johan F.M., 2009. "Farmers, Vertical Coordination, and the Restructuring of Dairy Supply Chains in Central and Eastern Europe," World Development, Elsevier, vol. 37(11), pages 1742-1758, November.
    15. Hoff, Karla & Stiglitz, Joseph E., 1998. "Moneylenders and bankers: price-increasing subsidies in a monopolistically competitive market," Journal of Development Economics, Elsevier, vol. 55(2), pages 485-518, April.
    16. Will Martin & Kym Anderson, 2006. "Agricultural Trade Reform and the Doha Development Agenda," World Bank Publications, The World Bank, number 6889.
    17. Murray Fulton & Konstantinos Giannakas, 2004. "Inserting GM Products into the Food Chain: The Market and Welfare Effects of Different Labeling and Regulatory Regimes," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(1), pages 42-60.
    18. Unnevehr, Laurian J., 2000. "Food safety issues and fresh food product exports from LDCs," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 23(3), September.
    19. Daron Acemoglu & Philippe Aghion & Rachel Griffith & Fabrizio Zilibotti, 2010. "Vertical Integration and Technology: Theory and Evidence," Journal of the European Economic Association, MIT Press, vol. 8(5), pages 989-1033, September.
    20. Besley, Timothy & Ghatak, Maitreesh, 2007. "Retailing public goods: The economics of corporate social responsibility," Journal of Public Economics, Elsevier, vol. 91(9), pages 1645-1663, September.
    21. Horstmann, Ignatius J & Markusen, James R, 1996. "Exploring New Markets: Direct Investment, Contractual Relations and the Multinational Enterprise," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(1), pages 1-19, February.
    22. Warning, Matthew & Key, Nigel, 2002. "The Social Performance and Distributional Consequences of Contract Farming: An Equilibrium Analysis of the Arachide de Bouche Program in Senegal," World Development, Elsevier, vol. 30(2), pages 255-263, February.
    23. Maertens, Miet & Swinnen, Johan F.M., 2009. "Trade, Standards, and Poverty: Evidence from Senegal," World Development, Elsevier, vol. 37(1), pages 161-178, January.
    24. Thomas Reardon & C. Peter Timmer & Christopher B. Barrett & Julio Berdegué, 2003. "The Rise of Supermarkets in Africa, Asia, and Latin America," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(5), pages 1140-1146.
    25. Macchiavello, Rocco, 2006. "Contractual Institutions, Financial Development and Vertical Integration: Theory and Evidence," CEPR Discussion Papers 5903, C.E.P.R. Discussion Papers.
    26. Grossman, Sanford J & Hart, Oliver D, 1986. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 691-719, August.
    27. Salop, Steven C, 1979. "A Model of the Natural Rate of Unemployment," American Economic Review, American Economic Association, vol. 69(1), pages 117-125, March.
    28. Liesbeth Dries & Thomas Reardon & Johan F. M. Swinnen, 2004. "The Rapid Rise of Supermarkets in Central and Eastern Europe: Implications for the Agrifood Sector and Rural Development," Development Policy Review, Overseas Development Institute, vol. 22, pages 525-556, September.
    29. Dilip Mookherjee & Debraj Ray, 2002. "Contractual Structure and Wealth Accumulation," American Economic Review, American Economic Association, vol. 92(4), pages 818-849, September.
    30. Rachel Kranton & Anand V. Swamy, 2008. "Contracts, Hold-Up, and Exports: Textiles and Opium in Colonial India," American Economic Review, American Economic Association, vol. 98(3), pages 967-989, June.
    31. C. Dolan & J. Humphrey, 2000. "Governance and Trade in Fresh Vegetables: The Impact of UK Supermarkets on the African Horticulture Industry," Journal of Development Studies, Taylor & Francis Journals, vol. 37(2), pages 147-176.
    32. Gene M. Grossman & Elhanan Helpman, 2005. "Outsourcing in a Global Economy," Review of Economic Studies, Oxford University Press, vol. 72(1), pages 135-159.
    33. Miet Maertens & Liesbeth Colen & Johan F. M. Swinnen, 2011. "Globalisation and poverty in Senegal: a worst case scenario?," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 38(1), pages 31-54, March.
    34. Winnie Mitullah, 2000. "Food Safety Requirements and Food Exports from Developing Countries: The Case of Fish Exports from Kenya to the European Union," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(5), pages 1159-1169.
    35. Hamish R. Gow & Johan F. M. Swinnen, 2001. "Private Enforcement Capital and Contract Enforcement in Transition Economies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(3), pages 686-690.
    36. Mitchell A. Petersen & Raghuram G. Rajan, 1995. "The Effect of Credit Market Competition on Lending Relationships," The Quarterly Journal of Economics, Oxford University Press, vol. 110(2), pages 407-443.
    37. Bellemare, Marc F., 2012. "As You Sow, So Shall You Reap: The Welfare Impacts of Contract Farming," World Development, Elsevier, vol. 40(7), pages 1418-1434.
    38. Pinelopi Koujianou Goldberg & Nina Pavcnik, 2007. "Distributional Effects of Globalization in Developing Countries," Journal of Economic Literature, American Economic Association, vol. 45(1), pages 39-82, March.
    39. Dries, Liesbeth & Swinnen, Johan F.M., 2010. "The impact of interfirm relationships on investment: Evidence from the Polish dairy sector," Food Policy, Elsevier, vol. 35(2), pages 121-129, April.
    40. Fischer, Ronald & Serra, Pablo, 2000. "Standards and protection," Journal of International Economics, Elsevier, vol. 52(2), pages 377-400, December.
    41. Irwin, Douglas A. & Tervio, Marko, 2002. "Does trade raise income?: Evidence from the twentieth century," Journal of International Economics, Elsevier, vol. 58(1), pages 1-18, October.
    42. Maurizio Zanardi, 2004. "Antidumping law as a collusive device," Canadian Journal of Economics, Canadian Economics Association, vol. 37(1), pages 95-122, February.
    43. Dries, Liesbeth & Swinnen, Johan F. M., 2004. "Foreign Direct Investment, Vertical Integration, and Local Suppliers: Evidence from the Polish Dairy Sector," World Development, Elsevier, vol. 32(9), pages 1525-1544, September.
    44. Genicot, Garance & Ray, Debraj, 2006. "Bargaining power and enforcement in credit markets," Journal of Development Economics, Elsevier, vol. 79(2), pages 398-412, April.
    45. Peter A. Diamond, 1982. "Wage Determination and Efficiency in Search Equilibrium," Review of Economic Studies, Oxford University Press, vol. 49(2), pages 217-227.
    46. Brian R. Copeland & M. Scott Taylor, 1995. "Trade and the Environment: A Partial Synthesis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(3), pages 765-771.
    47. Inderst, Roman & Wey, Christian, 2007. "Buyer power and supplier incentives," European Economic Review, Elsevier, vol. 51(3), pages 647-667, April.
    48. Johan F.M. Swinnen & Thijs Vandemoortele, 2008. "The Political Economy of Nutrition and Health Standards in Food Markets," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 30(3), pages 460-468.
    49. David Dollar & Aart Kraay, 2004. "Trade, Growth, and Poverty," Economic Journal, Royal Economic Society, vol. 114(493), pages 22-49, February.
    50. Marcel Fafchamps, 2004. "Market Institutions in Sub-Saharan Africa: Theory and Evidence," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262062364, January.
    51. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, January.
    52. Gow, Hamish R. & Streeter, Deborah H. & Swinnen, Johan F. M., 2000. "How private contract enforcement mechanisms can succeed where public institutions fail: the case of Juhocukor a.s," Agricultural Economics, Blackwell, vol. 23(3), pages 253-265, September.
    53. James E. Anderson & Leslie Young, 2002. "Imperfect Contract Enforcement," NBER Working Papers 8847, National Bureau of Economic Research, Inc.
    54. Elizaphan J.O. Rao & Matin Qaim, 2010. "Supermarkets, farm household income, and poverty: Insights from Kenya," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 28, Courant Research Centre PEG.
    55. Reardon, Thomas & Codron, Jean-Marie & Busch, Lawrence & Bingen, R. James & Harris, Craig, 1999. "Global Change In Agrifood Grades And Standards: Agribusiness Strategic Responses In Developing Countries," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IFAMA), vol. 2(03/04).
    56. Philippe Marcoul & Luc Veyssiere, 2010. "A Financial Contracting Approach to the Role of Supermarkets in Farmers' Credit Access," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(4), pages 1051-1064.
    57. Eswaran, Mukesh & Kotwal, Ashok, 1985. "A Theory of Two-Tier Labor Markets in Agrarian Economies," American Economic Review, American Economic Association, vol. 75(1), pages 162-177, March.
    58. Francisco Rodriguez & Dani Rodrik, 2001. "Trade Policy and Economic Growth: A Skeptic's Guide to the Cross-National Evidence," NBER Chapters,in: NBER Macroeconomics Annual 2000, Volume 15, pages 261-338 National Bureau of Economic Research, Inc.
    59. Klein, Benjamin & Crawford, Robert G & Alchian, Armen A, 1978. "Vertical Integration, Appropriable Rents, and the Competitive Contracting Process," Journal of Law and Economics, University of Chicago Press, vol. 21(2), pages 297-326, October.
    60. Jagdish Bhagwati, 2002. "Trade and Poverty in the Poor Countries," American Economic Review, American Economic Association, vol. 92(2), pages 180-183, May.
    61. Miet Maertens & Johan F.M. Swinnen, 2012. "Gender and Modern Supply Chains in Developing Countries," Journal of Development Studies, Taylor & Francis Journals, vol. 48(10), pages 1412-1430, October.
    62. W. Bentley MacLeod, 2006. "Reputations, Relationships and the Enforcement of Incomplete Contracts," CESifo Working Paper Series 1730, CESifo Group Munich.
    63. Johan F.M. Swinnen & Scott Rozelle & Tao Xiang & Thijs Vandemoortele, 2008. "A Theory of Standards-Driven Rural Development," LICOS Discussion Papers 19908, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    64. Reardon, Thomas & Barrett, Christopher B. & Berdegué, Julio A. & Swinnen, Johan F.M., 2009. "Agrifood Industry Transformation and Small Farmers in Developing Countries," World Development, Elsevier, vol. 37(11), pages 1717-1727, November.
    65. Wang, Honglin & Dong, Xiaoxia & Rozelle, Scott & Huang, Jikun & Reardon, Thomas, 2009. "Producing and Procuring Horticultural Crops with Chinese Characteristics: The Case of Northern China," World Development, Elsevier, vol. 37(11), pages 1791-1801, November.
    66. Eswaran, Mukesh & Kotwal, Ashok, 2007. "Quality-enhancing trade liberalization," Journal of Development Economics, Elsevier, vol. 83(2), pages 549-561, July.
    67. David G. Blanchflower & Andrew J. Oswald & Peter Sanfey, 1996. "Wages, Profits, and Rent-Sharing," The Quarterly Journal of Economics, Oxford University Press, vol. 111(1), pages 227-251.
    68. Luiz de Mello, 1997. "Foreign direct investment in developing countries and growth: A selective survey," Journal of Development Studies, Taylor & Francis Journals, vol. 34(1), pages 1-34.
    69. Minten, Bart & Randrianarison, Lalaina & Swinnen, Johan F.M., 2009. "Global Retail Chains and Poor Farmers: Evidence from Madagascar," World Development, Elsevier, vol. 37(11), pages 1728-1741, November.
    70. Dave D. Weatherspoon & Thomas Reardon, 2003. "The Rise of Supermarkets in Africa: Implications for Agrifood Systems and the Rural Poor," Development Policy Review, Overseas Development Institute, vol. 21, pages 333-355, May.
    71. Key, Nigel & Runsten, David, 1999. "Contract Farming, Smallholders, and Rural Development in Latin America: The Organization of Agroprocessing Firms and the Scale of Outgrower Production," World Development, Elsevier, vol. 27(2), pages 381-401, February.
    72. George J. Borjas & Valerie A. Ramey, 1995. "Foreign Competition, Market Power, and Wage Inequality," The Quarterly Journal of Economics, Oxford University Press, vol. 110(4), pages 1075-1110.
    73. Johan F.M. Swinnen & Anneleen Vandeplas, 2010. "Market power and rents in global supply chains," Agricultural Economics, International Association of Agricultural Economists, vol. 41(s1), pages 109-120, November.
    74. Peter Gibbon, 2003. "Value-chain Governance, Public Regulation and Entry Barriers in the Global Fresh Fruit and Vegetable Chain into the EU," Development Policy Review, Overseas Development Institute, vol. 21(5-6), pages 615-625, December.
    75. Kristine Van Herck & Nivelin Noev & Johan F.M. Swinnen, 2012. "Institutions, exchange and firm growth: evidence from Bulgarian agriculture," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 39(1), pages 29-50, February.
    76. Singh, Sukhpal, 2002. "Contracting Out Solutions: Political Economy of Contract Farming in the Indian Punjab," World Development, Elsevier, vol. 30(9), pages 1621-1638, September.
    77. Bruce Gardner, 2003. "U.S. Food Quality Standards: Fix for Market Failure or Costly Anachronism?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(3), pages 725-730.
    78. Gene M. Grossman & Elhanan Helpman, 2002. "Integration versus Outsourcing in Industry Equilibrium," The Quarterly Journal of Economics, Oxford University Press, vol. 117(1), pages 85-120.
    79. Minot, Nicholas & Ngigi, Margaret, 2004. "Are horticultural exports a replicable success story?," MTID discussion papers 73, International Food Policy Research Institute (IFPRI).
    80. Bardhan, Pranab & Udry, Christopher, 1999. "Development Microeconomics," OUP Catalogue, Oxford University Press, number 9780198773719.
    81. Rao, Elizaphan J.O. & Qaim, Matin, 2010. "Supermarkets, farm household income and poverty: Insights from Kenya," 2010 AAAE Third Conference/AEASA 48th Conference, September 19-23, 2010, Cape Town, South Africa 95771, African Association of Agricultural Economists (AAAE);Agricultural Economics Association of South Africa (AEASA).
    Full references (including those not matched with items on IDEAS)

    Citations

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


    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. Rob Kuijpers & Johan Swinnen, 2016. "Value Chains and Technology Transfer to Agriculture in Developing and Emerging Economies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 98(5), pages 1403-1418.
    3. Maertens, Miet & Swinnen, Johan, 2015. "Agricultural trade and development: A value chain perspective," WTO Staff Working Papers ERSD-2015-04, World Trade Organization (WTO), Economic Research and Statistics Division.
    4. Schuster, Monica & Maertens, Miet, 2013. "Do private standards create exclusive supply chains? New evidence from the Peruvian asparagus export sector," Food Policy, Elsevier, vol. 43(C), pages 291-305.
    5. Unnevehr, Laurian J. & Ronchi, Loraine, 2014. "Food safety and developing markets: Research findings and research gaps:," IFPRI discussion papers 1376, International Food Policy Research Institute (IFPRI).
    6. John C. Beghin & Miet Maertens & Johan Swinnen, 2017. "Nontariff Measures and Standards in Trade and Global Value Chains," World Scientific Book Chapters,in: Nontariff Measures and International Trade, chapter 2, pages 13-38 World Scientific Publishing Co. Pte. Ltd..
    7. Johan F.M. Swinnen & Anneleen Vandeplas, 2010. "Market power and rents in global supply chains," Agricultural Economics, International Association of Agricultural Economists, vol. 41(s1), pages 109-120, November.
    8. Johan F.M. Swinnen & Anneleen Vandeplas, 2014. "Price Transmission and Market Power in Modern Agricultural Value Chains," Working Papers id:5787, eSocialSciences.
    9. Kjetil Bjorvatn & Anna B. Milford & Lars Sørgard, 2015. "Farmers, Middlemen and Exporters: A Model of Market Power, Pricing and Welfare in a Vertical Supply Chain," Review of Development Economics, Wiley Blackwell, vol. 19(1), pages 31-44, February.
    10. Vlaeminck, Pieter & Vranken, Liesbet & Van Den Broeck, Goedele & Vande Velde, Katrien & Raymaekers, Karen & Maertens, Miet, 2015. "Farmers’ preferences for Fair Trade contracting in Benin," Working Papers 225931, Katholieke Universiteit Leuven, Centre for Agricultural and Food Economics.
    11. Johan Swinnen, 2014. "Global Agricultural Value Chains, Standards, and Development," RSCAS Working Papers 2014/30, European University Institute.
    12. Kunte, Sebastian & Wollni, Meike & Keser, Claudia, 2014. "Making it personal: breach and private ordering in a contract farming experiment," Discussion Papers 186136, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    13. Cuffaro, Nadia & Di Giacinto, Marina, 2015. "Credence goods, consumers’ trust in regulation and high quality exports," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), issue 2, August.

    More about this item

    Keywords

    Contract farming; Enforcement; Development; Rent distribution; High-value agriculture; Globalization; Markets;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fpr:ifprid:932. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: http://edirc.repec.org/data/ifprius.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.