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The Extent of the Market and Stages of Agricultural Specialization

Author

Listed:
  • M. Shahe Emran

    (Department of Economics/Institute for International Economic Policy, George Washington University)

  • Forhad Shilpi

    (DECRG, World Bank)

Abstract

This paper provides empirical evidence of an U-shaped relationship between the extent of the market (size of the relevant urban market) and the pattern of crop specialization in a village economy. We use the recent two-stage estimator developed by Lewbel (2007) and exploit heteroskedasticity for identification of the causal effects of market size. The results suggest that the portfolio of crops in a village economy becomes more diversified initially as the extent of the market increases. However, after the market size reaches a threshold, the production structure starts to specialize again. This evidence on the stages of agricultural diversification is consistent with the stages of diversification identified in the recent literature for the economy as a whole and also for the manufacturing sector.

Suggested Citation

  • M. Shahe Emran & Forhad Shilpi, 2008. "The Extent of the Market and Stages of Agricultural Specialization," Working Papers 2008-11, The George Washington University, Institute for International Economic Policy.
    • Handle: RePEc:gwi:wpaper:2008-11
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    References listed on IDEAS

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    More about this item

    Keywords

    Structural Change; Agriculture; Crop Specialization; The Extent of the Market; Market versus Home Production; Commercialization;
    All these keywords.

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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