The Extent of the Market and Stages of Agricultural Specialization

Canadian Journal of Economics, Forthcoming

Posted: 5 Sep 2010

See all articles by M. Shahe Emran

M. Shahe Emran

George Washington University - Department of Economics

Forhad Shilpi

World Bank - Development Research Group (DECRG)

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Date Written: September 3, 2010

Abstract

This paper provides empirical evidence of an U-shaped causal 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 (2008) and exploit heteroskedasticity for identification. 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

Emran, M. Shahe and Shilpi, Forhad, The Extent of the Market and Stages of Agricultural Specialization (September 3, 2010). Canadian Journal of Economics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1671626

M. Shahe Emran (Contact Author)

George Washington University - Department of Economics ( email )

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Forhad Shilpi

World Bank - Development Research Group (DECRG) ( email )

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