Transactions Costs and Agricultural Productivity: Implications of Isolation for Rural Poverty in Madagascar

International Food Policy Research Institute, MSSD Discussion Paper No. 56

78 Pages Posted: 5 Nov 2003

See all articles by David C. Stifel

David C. Stifel

Lafayette College

Bart Minten

Cornell University - Food and Nutrition Policy Program; Catholic University of Leuven (KUL) - Department of Agro-Engineering and Economics

Paul Dorosh

International Food Policy Research Institute (IFPRI)

Date Written: February 2003

Abstract

This paper examines the mechanisms that transmit isolation into poverty in Madagascar using household survey data combined with a census of administrative communes. Given the importance of agriculture to the rural poor, where nine out of ten poor persons is engaged in farming, we concentrate on isolation manifesting itself in the form of high transaction costs such as the cost of transporting agricultural commodities to major market centers. We find that (a) the incidence of poverty in rural Madagascar increases with remoteness; (b) yields of major staple crops fall considerably as one gets farther away from major markets; (c) and the use of agricultural inputs declines with isolation. Simulation results using output from rice production function estimates suggest that halving travel time per kilometer on major highways (feeder roads) will increase primary season rice production by 1.3 (1.0) percent.

Suggested Citation

Stifel, David C. and Minten, Bart and Dorosh, Paul, Transactions Costs and Agricultural Productivity: Implications of Isolation for Rural Poverty in Madagascar (February 2003). International Food Policy Research Institute, MSSD Discussion Paper No. 56, Available at SSRN: https://ssrn.com/abstract=449220 or http://dx.doi.org/10.2139/ssrn.449220

David C. Stifel (Contact Author)

Lafayette College ( email )

Easton, PA 18042
United States

Bart Minten

Cornell University - Food and Nutrition Policy Program ( email )

BP 6313
Antananarivo 101
Madagascar
033 11 38520 (Phone)
261 20 2222198 (Fax)

Catholic University of Leuven (KUL) - Department of Agro-Engineering and Economics ( email )

Kardinaal Mercierlaan 92
Heverlee, B-3001
Belgium

Paul Dorosh

International Food Policy Research Institute (IFPRI) ( email )

1201 Eye St, NW,
Washington, DC 20005
United States
+1 202-862-5600 (Phone)
+1 202-467-4439 (Fax)

HOME PAGE: http://www.ifpri.org/

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