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Should African rural development strategies depend on smallholder farms ? an exploration of the inverse productivity hypothesis

  • Larson, Donald F.
  • Otsuka, Keijiro
  • Matsumoto, Tomoya
  • Kilic, Talip

In Africa, most development strategies include efforts to improve the productivity of staple crops grown on smallholder farms. An underlying premise is that small farms are productive in the African context and that smallholders do not forgo economies of scale -- a premise supported by the often observed phenomenon that staple cereal yields decline as the scale of production increases. This paper explores a research design conundrum that encourages researchers who study the relationship between productivity and scale to use surveys with a narrow geographic reach, when policy would be better served with studies based on wide and heterogeneous settings. Using a model of endogenous technology choice, the authors explore the relationship between maize yields and scale using alternative data. Since rich descriptions of the decision environments that farmers face are needed to identify the applied technologies that generate the data, improvements in the location specificity of the data should reduce the likelihood of identification errors and biased estimates. However, the analysis finds that the inverse productivity hypothesis holds up well across a broad platform of data, despite obvious shortcomings with some components. It also finds surprising consistency in the estimated scale elasticities.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 6190.

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Date of creation: 01 Sep 2012
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Handle: RePEc:wbk:wbrwps:6190
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  1. Taslim, M A, 1989. "Supervision Problems and the Size-Productivity Relation in Bangladesh Agriculture," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 51(1), pages 55-71, February.
  2. Larson, Donald & Mundlak, Yair, 1997. "On the Intersectoral Migration of Agricultural Labor," Economic Development and Cultural Change, University of Chicago Press, vol. 45(2), pages 295-319, January.
  3. Barrett, Christopher B. & Bellemare, Marc F. & Hou, Janet Y., 2010. "Reconsidering Conventional Explanations of the Inverse Productivity-Size Relationship," World Development, Elsevier, vol. 38(1), pages 88-97, January.
  4. Martin Ravallion & Shaohua Chen & Prem Sangraula, 2007. "New Evidence on the Urbanization of Global Poverty," Population and Development Review, The Population Council, Inc., vol. 33(4), pages 667-701.
  5. Beegle, Kathleen & De Weerdt, Joachim & Friedman, Jed & Gibson, John, 2010. "Methods of household consumption measurement through surveys : experimental results from Tanzania," Policy Research Working Paper Series 5501, The World Bank.
  6. Mundlak, Yair & Butzer, Rita & Larson, Donald F., 2008. "Heterogeneous technology and panel data : the case of the agricultural production function," Policy Research Working Paper Series 4536, The World Bank.
  7. Ivanic, Maros & Martin, Will & Zaman, Hassan, 2011. "Estimating the short-run poverty impacts of the 2010-11 surge in food prices," Policy Research Working Paper Series 5633, The World Bank.
  8. Michael Lipton, 2006. "Can Small Farmers Survive, Prosper, or be the Key Channel to Cut Mass Poverty?," The Electronic Journal of Agricultural and Development Economics, Food and Agriculture Organization of the United Nations, vol. 3(1), pages 58-85.
  9. Feder, Gershon, 1985. "The relation between farm size and farm productivity : The role of family labor, supervision and credit constraints," Journal of Development Economics, Elsevier, vol. 18(2-3), pages 297-313, August.
  10. Carletto, Calogero & Savastano, Sara & Zezza, Alberto, 2013. "Fact or artifact: The impact of measurement errors on the farm size–productivity relationship," Journal of Development Economics, Elsevier, vol. 103(C), pages 254-261.
  11. Deininger, Klaus & Feder, Gershon, 1998. "Land institutions and land markets," Policy Research Working Paper Series 2014, The World Bank.
  12. Barrett, Christopher B., 1996. "On price risk and the inverse farm size-productivity relationship," Journal of Development Economics, Elsevier, vol. 51(2), pages 193-215, December.
  13. Ayal Kimhi, 2006. "Plot size and maize productivity in Zambia: is there an inverse relationship?," Agricultural Economics, International Association of Agricultural Economists, vol. 35(1), pages 1-9, 07.
  14. Lamb, Russell L., 2003. "Inverse productivity: land quality, labor markets, and measurement error," Journal of Development Economics, Elsevier, vol. 71(1), pages 71-95, June.
  15. Yair MUNDLAK & Donald F. LARSON & Rita BUTZER, 1999. "Rethinking Within and Between Regressions: The Case of Agricultural Production Functions," Annales d'Economie et de Statistique, ENSAE, issue 55-56, pages 475-501.
  16. Carter, Michael R, 1984. "Identification of the Inverse Relationship between Farm Size and Productivity: An Empirical Analysis of Peasant Agricultural Production," Oxford Economic Papers, Oxford University Press, vol. 36(1), pages 131-45, March.
  17. Michael Kevane, 1996. "Agrarian Structure and Agricultural Practice: Typology and Application to Western Sudan," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(1), pages 236-245.
  18. Mundlak, Yair, 1993. "On the Empirical Aspects of Economic Growth Theory," American Economic Review, American Economic Association, vol. 83(2), pages 415-20, May.
  19. Hazell, Peter & Poulton, Colin & Wiggins, Steve & Dorward, Andrew, 2010. "The Future of Small Farms: Trajectories and Policy Priorities," World Development, Elsevier, vol. 38(10), pages 1349-1361, October.
  20. Bardhan, Pranab K, 1973. "Size, Productivity, and Returns to Scale: An Analysis of Farm-Level Data in Indian Agriculture," Journal of Political Economy, University of Chicago Press, vol. 81(6), pages 1370-86, Nov.-Dec..
  21. Assunção, Juliano & Braido, Luis H.B., 2007. "AJAE Appendix: Testing Household-Specific Explanations for the Inverse Productivity Relationship," American Journal of Agricultural Economics Appendices, Agricultural and Applied Economics Association, vol. 89(4), November.
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