Cities and Agricultural Transformation in Africa: Evidence from Ethiopia

65 Pages Posted: 8 Mar 2016

See all articles by Joachim Vandercasteelen

Joachim Vandercasteelen

KU Leuven - Centre for Institutions and Economic Performance (LICOS)

Seneshaw Tamru

KU Leuven - Centre for Institutions and Economic Performance (LICOS)

Bart Minten

International Food Policy Research Institute (IFPRI) - CGIAR Consortium

Johan F. M. Swinnen

KU Leuven - Centre for Institutions and Economic Performance (LICOS); European Commission, DG II

Date Written: February 2016

Abstract

Due to the rapid growth of cities in Africa, a larger number of farmers is living in the rural hinterland providing food to urban residents. However, empirical evidence on how urbanization affects these farmers is scarce. To fill this gap, this paper explores the relationship between proximity to a city and the production behavior of rural staple crop producers. More in particular, we analyze unique data from teff producing farmers in major producing areas around Addis Ababa, the Ethiopian capital. We find that farmers more closely located to Addis Ababa face higher wages and land rental prices, but because they receive higher teff prices they have better incentives to intensify production. Moreover, we observe that modern input use, land and labor productivity, and profitability in teff production improve with urban proximity. There is a strong and significant direct effect of urban proximity, which is suggested to be related with more use of formal factor markets, less transaction costs, and better access to information. In contrast, we do not find strong and positive relationships of rural population density increases -- as an alternative source of agricultural transformation -- as they seem to lead to immiserizing effects in these settings. Our results show that urban proximity should be considered as an important determinant of the process of agricultural intensification and transformation in developing countries.

Keywords: Agricultural Transformation, Crop Intensification, Urbanization, Cities, Ethiopia, Sub Saharan Africa

Suggested Citation

Vandercasteelen, Joachim and Tamru, Seneshaw and Minten, Bart and Swinnen, Johan F.M., Cities and Agricultural Transformation in Africa: Evidence from Ethiopia (February 2016). Available at SSRN: https://ssrn.com/abstract=2744504 or http://dx.doi.org/10.2139/ssrn.2744504

Joachim Vandercasteelen (Contact Author)

KU Leuven - Centre for Institutions and Economic Performance (LICOS) ( email )

Waaistraat 6 - box 3511
Leuven, 3000
Belgium

Seneshaw Tamru

KU Leuven - Centre for Institutions and Economic Performance (LICOS)

Waaistraat 6 - box 3511
Leuven, 3000
Belgium

Bart Minten

International Food Policy Research Institute (IFPRI) - CGIAR Consortium ( email )

1201 Eye St, NW,
Washington, DC 20005
United States

Johan F.M. Swinnen

KU Leuven - Centre for Institutions and Economic Performance (LICOS) ( email )

Waaistraat 6
Leuven, B-3000
Belgium

European Commission, DG II ( email )

Wetstrath 200
Office 15172
1049 Brussels
Belgium
+32-2-2960442 (Phone)
Not available (Fax)

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