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Market integration and structural transformation in a poor rural economy

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Abstract

By developing a simple theoretical model of the impact of market integration on sectoral output and employment in a poor rural setting, this paper demonstrates that trade can induce asymmetric growth. Under certain, plausible, assumptions, the non-farm sector will grow much faster than the agricultural sector when markets become integrated. Promoting market integration may thus be an effective way of encouraging diversification beyond agriculture and catalysing structural change in poor rural economies.

Suggested Citation

  • Soderbom, Mans & Rijkers, Bob, 2009. "Market integration and structural transformation in a poor rural economy," Policy Research Working Paper Series 4856, The World Bank.
  • Handle: RePEc:wbk:wbrwps:4856
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    File URL: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2009/03/09/000158349_20090309075416/Rendered/PDF/WPS4856.pdf
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    References listed on IDEAS

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    1. Krugman, Paul, 1998. "What's New about the New Economic Geography?," Oxford Review of Economic Policy, Oxford University Press, vol. 14(2), pages 7-17, Summer.
    2. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
    3. de Janvry, Alain & Fafchamps, Marcel & Sadoulet, Elisabeth, 1991. "Peasant Household Behaviour with Missing Markets: Some Paradoxes Explained," Economic Journal, Royal Economic Society, vol. 101(409), pages 1400-1417, November.
    4. Romer, Paul M, 1987. "Growth Based on Increasing Returns Due to Specialization," American Economic Review, American Economic Association, vol. 77(2), pages 56-62, May.
    5. John Laitner, 2000. "Structural Change and Economic Growth," Review of Economic Studies, Oxford University Press, vol. 67(3), pages 545-561.
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    Cited by:

    1. Louise Fox, 2015. "Are African Households Heterogeneous Agents?; Stylized Facts on Patterns of Consumption, Employment, Income and Earnings for Macroeconomic Modelers," IMF Working Papers 15/102, International Monetary Fund.

    More about this item

    Keywords

    Food&Beverage Industry; Economic Theory&Research; Rural Poverty Reduction; Food Security;

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