market state and civil organizations in latin america beyond the debt crisis the context for rural development abstract the development strategy emerging in latin america implies a sharply redefined balance in the relative roles of the market the state and civil organizations market liberalization has been extensive and intense efforts have been undertaken to make the new rules credible the state has been divested of many productive and regulatory activities but descaling is a reflection of short run stabilization policies and signaling not of long term tendencies since an active state remains strongly in demand civil organizations are assuming active roles as alternative forms to produce and service members and as pressure groups agriculture has gained considerably from the policy reforms together with democratic representation and decentralization of governance this gives renewed opportunities for successful rural development initiatives

price distortions in agriculture and their effects an international comparison the central thesis of this paper is that agricultural pricing policies pursued by developing countries produce effects which are diametrically opposite to those produced by the pricing policies of many developed countries and that the policies of both are costly in terms of global welfare in general the agricultural sector in developing countries is heavily taxed while that in the developed countries receives substantial price protection the effects of agricultural price distortions on output consumption trade and rural employment are estimated for nine countries in addition the effects of price distortions on the distribution of income between producers and consumers on government revenue and foreign exchange and the net social losses of the policies are calculated the results indicate that there are large income transfers and impacts on migration from the rural to the urban sector in developing countries and from the urban to the rural sector in developed economies

stabilization adjustment and the poor abstract this paper attempts to survey the recent literature on the impact of stabilization and adjustment programs upon the poor and to consider some of the key issues in the context of a particular equity oriented low income country tanzania after looking at some of the approaches of earlier studies this paper analyzes the effects of restructuring policies macroeconomic restraint and strategic policy change the author then reviews available evidence on the recent experience of tanzania with external shock efforts at stabilization and relations with the imf in conclusion the author argues that in order to better understand their impact on poverty we need more detailed analyses of specific countries experience with different kinds of macroeconomic imbalance and different short to medium term policy responses however he does indicate with some certainty that when equivalent external blows impact upon very low income countries there must be a presumption that other things being equal including the distribution of income the proportion of households and people pushed over the line into absolute poverty will be greater than in middle income countries the international community should provide external finance to aid these low income countries in limiting the negative impact on the poorest

understanding agricultural policy in africa the contributions of robert bates abstract robert bates s writings on the determinants of agricultural policy in africa employ rational choice and dialectical approaches to political economy this paper discusses some of the strengths and weaknesses of each and proposes an alternative dynamic approach to understanding both the limitations and the sources of agricultural policy with particular reference to kenya

the state and economic stagnation in tropical africa abstract politics while only one strand in the explanation of africa s massive economic problems is nonetheless a significant factor a central conundrum facing postcolonial political leaders is how to govern and hold together unintegrated peasant societies in the absence of legitimacy personal rule a particular mode of patrimonial governance provides an answer permitting regime survival and the advancement of political insiders but personal rule has an economically destructive tendency that only shrewd political leadership and propitious world economic conditions can check if uncontrolled certain political practices corrode bureaucratic and legal rationality and promote the misallocation of scarce public resources the result can be a downward spiral of interrelated political and economic decline that is increasingly difficult to reverse

policy reform and productivity change in chinese agriculture a distance function approach abstract agricultural policy reform has been an important source of change in the chinese agricultural sector the reforms led to productivity growth and helped china to pursue its self sufficiency goal especially in the grain sector in order to analyze whether observable productivity growth stems from technologically induced components or from the market induced parts a multi input multi output model is derived by using an econometric distance function framework a decomposition allows to distinguish allocative effects scale effects technological change and technical efficiency change data on farms in zhejiang from 1986 to 2000 are used to analyze the impact of policy reform

purchasing power parity in the long run a cointegration approach this paper utilizes cointegration analysis to examine purchasing power parity relationships over a long time horizon the results indicate that the exchange rate is cointegrated strongly with the wholesale price index ratio and somewhat weakly with the consumer price index ratio the cointegrating coefficient between the exchange rate and the price ratio is close to one when cointegration is confirmed the hypothesis that the real exchange rate follows a random walk is rejected in most cases finally a new test for common trends finds no such common trends in exchange rates or price ratios copyright 1990 by ohio state university press

marketed surplus under risk do peasants agree with sandmo using a newly defined notion of aversion to income risk the behavior of the marketed surplus producer under price risk is characterized unlike the familiar case first examined by sandmo output depends on both ordinal preferences for goods and on risk attitudes conditions are found that yield an output level under risk that is smaller than under certainty if these conditions do not hold both risk and risk aversion may have a positive effect on output implications for econometric studies of risk attitudes are considered and illustrated with an example finally we examine the effect of uncertainty on the peasant s long run equilibrium

agricultural performance and development strategy retrospect and prospect abstract the slow pace and inequitable pattern of past agricultural growth have been major factors in the continuing problems of poverty hunger and unemployment especially in the poorer regions of the third world past experience shows that agriculture has an important potential in economic development given appropriate structures and policies these historical lessons are of strategic significance for poor countries as they confront severe problems of adjustment this paper examines the main payoffs and obstacles to the pursuit of an agriculture led industrialization strategy together with proposals for appropriate policies that can support such a strategy

evaluation of the influence of agricultural price policy on cotton production in cote d ivoire abstract in this paper the impact of the cotton pricing policy of the marketing board of cote d ivoire is investigated a theoretical model is developed to derive the price level which maximizes revenue generated from the marketing board s cotton transactions a dynamic cotton supply function was estimated and used to compute elasticities the estimates indicate that farmers in the country response to price changes and that the pricing policy of the marketing board has been consistent with an objective of generating revenue for the government

sources of stagnation in sub saharan africa abstract this paper investigates the sources of economic stagnation in sub saharan africa during the 1970s several policy variables are considered as well as a set of environmental variables which include climate violence export prices and other exogenous factors the paper uses statistical analysis in an attempt to identify the relative importance of the policy variables and the environmental variables taken as groups it also seeks to identify particular policy variables which seem to have been most significant in determining growth outcomes the technique employed for investigation is reduced form econometric estimation in a preliminary analysis the impact of the international trade environment on average economic performance in africa during the period since independence is investigated the results suggest an extremely close relationship between movements in export prices and average performance throughout the 20 year period a second econometric exercise investigates the joint impacts of environmental and policy variables on growth in a cross section of african states since 1970 the spirit of the approach is exploratory and a relatively large number of variables are constructed and tested through multivariate analysis a primary finding is that the environmental variables seem to have had more impact on growth as a group than the policy variables this finding must be qualified however by the continuing lack of some important policy variables agricultural price data have not yet become available in sufficient quantity for cross section analysis nor have several important human resource variables and indices of the use of resources in the public domain among the policy variables which have been used for the analysis those identified with retrenchment during periods of declining commodity prices seem most significant primary among these are the real effective exchange rate and some measures of effectiveness in foreign exchange reallocation during periods when imports must contract severely in the final section of the paper the cross section results are used for a counterfactual analysis of the growth experiences of individual african states measures of growth opportunity cost are constructed which suggest the degree to which errors in management and uncontrollable circumstances have held states below their potential growth paths the results suggest that some success stories may owe much to good luck while some failures may well be due less to bad management than to adverse circumstances

agriculture in recent development theory abstract this paper is a critical review of recent contributions to the literature on agriculture in development theory it considers and compares the main lines of advance made within neoclassical neo marxian and structuralist approaches recent neo marxian and structuralist studies of agrarian development reveal that traditional agriculture is neither stationary nor efficient that resource allocation cannot be separated from wealth distribution or production organization that forms of surplus appropriation do not necessarily follow the dictates of efficiency that the social relations of production may inhibit accumulation and determine the forms of technological change that the state s role in primitive accumulation is more economic than explicitly coercive political and that political and macroeconomic constraints preclude a simple get the prices right view of the intersectoral terms of trade the thrust of these developments is to challenge both neoclassical and some orthodox marxian formulations of agrarian development issues and add to the insights to be gleaned from a political economy of development

moving off the farm and intensifying agricultural production in shandong a case study of rural labor market linkages in china this study examines linkages between off farm labor markets and the labor allocated by farmers to on farm production of fruit crops using a stratified random sample of rural households in shandong province we find that young and educated members of the labor force tend to work more frequently in the off farm labor market and that off farm employment reduces the likelihood and intensity of fruit production fruit production is associated with lower levels of off farm employment households and individuals who are less likely or able to find off farm employment can benefit from shifting into fruit production although off farm employment is an important avenue out of poverty fruit production provides ways for the less educated and older households to raise their income

labor market participation of chinese agricultural households empirical evidence from zhejiang province abstract this work is devoted to the analysis of the different labor market participation regimes of chinese farm households over the reform process in the 1980s and 1990s using household data over the period 1986 2002 from the province zhejiang we apply a multinomial logit model to empirically examine household farm and regional characteristics affecting the probability that farmers participate in one of four alternative labor market regimes as generally accepted off farm participation is the dominant form of farm households labor market participation but rural households show additionally a significant impact on rural employment mainly linked with non agricultural household business results suggest that labor market decisions are significantly related to several family farm and village characteristics in particular we find education to be a key determinant of participation furthermore results point to a higher probability of female household members to take up off farm work

purchasing power parity and unit root tests using panel data abstract this paper reports the results of unit root tests for real exchange rates using a panel framework this panel approach provides greatly improved power compared to conventional univariate time series unit root tests we obtain evidence supporting ppp over the recent flexible exchange rate period for g 6 and oecd countries we show explicitly that failure to find such evidence in previous research was due to the low power of the tests

issues relating to agricultural pricing policies and their analysis in developing countries abstract agricultural pricing policies in developing countries are often the result of complex interactions between producer consumer and merchant groups and their relative effectiveness in influencing government decision making even within governments various ministries often have opposing views in this environment one of the contributions a policy analyst can make is to attempt to quantify the effects of different policy options this permits a more informed discussion which hopefully leads to better decision making and an improved incentive environment many analyses of agricultural pricing policies have used the standard partial equilibrium analysis where no linkages between commodity markets were considered in this paper we have considered cross price effects also we have discussed issues relating to other adjustments refinements of the standard method so that a practitioner not familiar with the various methods can form an opinion of what the options are and what adjustments may be appropriate for a particular case in question the adjustments relate to overvaluation of currencies input price distortions differences in the degree of distortions between producers and consumers and variability of border prices the inclusion of cross price elasticities was important for assessing production consumption and trade effects for argentina but for the other countries it resulted in only somewhat improved accuracy the adjustment for exchange rates had a large impact in egypt and was important for other countries as well this underlines the importance of exchange rates as key variables for agricultural pricing policies in general the numbers show that the traditional taxation policies of agricultural products in the sample of developing countries is somewhat less widespread than in the past these policies however continue to favor consumers over producers with significant losses for some of the latter the large size of welfare losses especially compared to efficiency losses highlights the importance of correcting distorted prices that adversely affect the poorest sections of society also the usual government objective of taxing producers to raise revenues is frequently defeated by the large subsidies provided to consumers for the partitioner for whom time is often of the essence the assessment of welfare effects using the partial equilibrium method may provide reasonably good first cut estimates of the order of magnitude of the impact of distortions but often these base case estimates can and should be adjusted for a number of possible factors the analyst needs to determine how important accurate estimates of key variables are to the policy makers he or she then needs to compare the costs involved in generating or gathering the data and doing the calculations with the benefits of a broader and more accurate analysis of the distortionary effects of the particular case in question

rural urban disparity and sectoral labour allocation in china this study examines china s rural urban segmentation and its causes in the context of economic reforms household survey and aggregate data indicate a v shaped process in which rural urban consumption and income differentials decreased between 1978 and 1985 but then have continually increased to historically high levels this sectoral division is consistent with production function estimates based on provincial data that reveal higher labour productivity in urban state owned industries than in rural industries and agriculture to explain the v shaped change we argue that the precedent of successful rural reforms raised farmers relative earnings but the remaining obstacles to an efficient sectoral allocation of labour have prevented china from eliminating dualism recent financial policies consisting of urban price subsidies and increased investment credits have also had influential distribution effects that are biased against the rural sector

national wage trends and migration in a chinese village economy a micro level modeling approach based on a composite utility function china s economy is experiencing a regime shift away from a fully elastic supply of labor from a large pool of rural surplus labor and toward a situation of increasing labor scarcity and rising wage rates moreover faster wage increases in the regions of origin of many rural urban migrants are likely to affect the dynamics of inter regional migration these wage trends have implications at the local level in particular in a setting in which migration connects rural communities to the national labor market and in which migration is of high importance for the livelihoods of rural households taking a village perspective this article develops a village computable general equilibrium model to study local impacts of current wage trends in china as a central piece of the model the role of access to migration for household livelihoods is recognized access to migration is linked to household demographics and included in the model through a composite utility function that captures household preferences and disutilities associated with alternative off farm activities simulation results illustrate how households utility considerations affect migration responses to national wage changes statements about possible impacts on village level labor supply land use and agricultural production are made when migration wages and local off farm wages are simulated to increase an overall increase in household and village migration and a higher supply of labor to local off farm labor markets is accompanied by a contraction of farm production although land is reallocated between households with different migration responses total agricultural output declines

co integration error and purchasing power parity between canada and the united states the concept of cointegration and the associated error correction representation of a dynamic process see r f engle and c w g granger 1987 is applied to the purchasing power parity relationship between canada and the united states the results are supportive of purchasing power parity as a long run equilibrium relationship between the canadian dollar american dollar exchange rate the purchasing power parity relationship is maintained although with different dynamic mechanisms during both fixed and flexible exchange rate regimes

dimensions and diversity of property rights in rural china dilemmas on the road to further reform abstract this paper contributes to the debate over land tenure in rural china by conceptualizing and measuring multiple dimensions of property rights in a way that elucidates the competing interests that are affected by the property rights regime utilizing a unique village level data set this paper argues that the regional and temporal variation in rural property rights signals a pattern in which decentralized institutional innovation occurs in response to the competing interests of the national state of local authorities and of present and possible future individual land users unlike the earlier debate concerning the household responsibility system the current property rights dilemma is intrinsically more complex because the potential conflicts of interest between individuals local collectives and the state are greater resolution of that debate will ultimately require careful exploration of the reality and substance of the tradeoffs and competing interests that make further reform of rural property rights so difficult

real exchange rate behavior abstract using random simulations with artificial data with identical sample characteristics to the long sample exchange rate data employed by lothian and taylor lothian j r and taylor m p 1996 the recent float from the perspective of the past two centuries journal of political economy 104 488 509 we show that standard unit root tests have extremely low power over sample sizes corresponding to the recent float the probability of rejecting the null hypothesis when it is false is extremely low with 20 years or even 50 years of data and only reaches an acceptable level over much longer spans

female labor supply in japan implications of the informal sector for labor force participation and hours of work this paper extends previous work on labor supply in japan by treating the simultaneous labor force participation and hours of work decisions for japanese wives both employees and family workers it estimates a trichotomous participation model for a sample from the tokyo metropolitan area and then estimates hours and wage equations and aggregate labor supply elasticities the empirical results generally confirm the economic model s theoretical predictions although the estimated aggregate wage and income elasticities for employees are somewhat higher than previous estimates for the u s they are of the same order of magnitude however the level of the husband s income has an unexpected positive effect on the annual hours that employees work and the elasticities estimated for family workers are usually large

the evolution of income inequality in rural china abstract in this article we analyze trends in income inequality and the distribution of income in rural china from 1987 to 1999 we find an uneven but long run increase in inequality in rural china and show that nearly half of the rural population was not much better off in 1999 than at the start of the period we rule out geography as the most important factor for explaining income differences and the increases that occurred over time much more important were growing differences between households living in the same village province or region we also find that access to nonagricultural incomes from local wage employment and family businesses contributes to inequality but that employment outside the county in which a household lives and accessed through temporary migration is relatively equalizing finally we document important strengths and weaknesses of the primary data set used for our analyses relative to other data sources available for study of inequality and poverty in rural china

cointegration tests of the monetary exchange rate model for three high inflation economies tests of cointegration are applied to the monetary model of the exchange rate to determine if the model represents a long run equilibrium relation for three high inflation countries the countries tested are argentina chile and israel each paired with the united states as the base country evidence favorable to cointegration among the variables of the monetary model is found using johansen s maximum likelihood procedure copyright 1994 by ohio state university press

are real exchange rates nonstationary evidence from a panel data test it is well documented that real exchange rates between the united states and many industrialized countries in the post bretton woods period are integrated this result implies that purchasing power parity ppp does not hold even as a long run relationship this paper demonstrates that the failure to reject the unit root hypothesis may result from the low power of existing univariate test procedures i test for unit roots in real exchange rates by employing a more powerful panel based procedure using both cpi and wpi real dollar exchange rate data i strongly reject the null hypothesis of a unit root my results provide overwhelming support for the long run ppp under the current float copyright 1996 by ohio state university press

cash crop production food price volatility and rural market integration in the third world large farmers in the third world often devote to cash crops a larger share of their land than do small farmers this paper suggests a possible explanation even in the presence of food markets third world farmers food security is best assured by food self sufficiency a model of crop portfolio choice under multivariate risk is used to show that reasonable assumptions regarding risk and preferences reproduce the observed pattern simulations further indicate that food market integration reduces the need for food self sufficiency policy implications are drawn regarding domestic trade liberalization and agricultural technology

real and nominal exchange rates in the long run an empirical investigation abstract this paper reports on econometric tests of the hypothesis that purchasing power parity holds as a long run relationship using data on eight industrialized countries during the flexible exchange rate period the empirical work proceeds by i testing whether nominal exchange rates and relative price levels are co integrated and ii conducting impulse response analysis of long run exchange rate and relative price level changes to explain the data keynesian models suggest that shocks during the estimation period were due principally to exogenous shifts in aggregate demand while equilibrium models suggest that monetary factors have been relatively more important

purchasing power parity as a long run relation dickey fuller and stock watson tests of purchasing power parity ppp as a long run proposition are provided within the cointegration framework proposed by granger since different countries use different weights to construct price indices the traditional constraint that the coefficients on the price indices should be unity in the log linear ppp relation is relaxed the absence of a general ppp relation cannot be rejected at most a ppp relation is indicated in five out of fifteen country pairs that are examined even if a long run ppp relation exists it is not found to be useful in predicting future nominal exchange rates which is consistent with efficient speculative markets

regional agricultural labour productivity convergence in china abstract this paper tests for regional agricultural labour productivity alp convergence in china the analysis indicates that alp diverges between 1985 and 1992 but converges between 1992 and 2000 further analysis shows that these findings can be explained by the different rates of agricultural out migration in these two periods we argue that these different rates of regional agricultural out migration can be attributed to the different government policies and economic conditions before and after 1992 in particular migrants from rural to urban areas found it easier to obtain both food and work in the post 1992 era

does the exchange rate follow a random walk a monte carlo study of four tests for a random walk abstract several authors have urged that real and nominal exchange rates follow a random walk conditions under which the exchange rate follows a random walk are reviewed in this paper many of these do not appear to hold therefore the empirical evidence presents a puzzle some evidence suggets the exchange rate follows a random walk while other evidence suggests the opposite should be true this paper attempts to reconcile the evidence it is argued that the tests for a random walk have low power monte carlo evidence on four tests for a random walk is presented that suppors this claim

real exchange rate behavior the recent float from the perspective of the past two centuries using annual data spanning two centuries for dollar sterling and franc sterling real exchange rates we find strong evidence of mean reverting real exchange rate behavior using simple stationary autoregressive models estimated on prefloat data we easily outperform nonstationary real exchange rate models in dynamic forecasting exercises over the recent float such stationary univariate equations explain 60 80 percent of the in sample variation in real exchange rates although the degree of short run persistence may be high the econometric estimates imply a half life of shocks to the real exchange rate of about 6 years for dollar sterling and a little under 3 years for franc sterling

quasi maximum likelihood estimation of multivariate probit models farm couples labor participation joint estimation of farmers farm and off farm work participation requires a multivariate probit model in which the number of equations is twice the number of household members where there are more than two such equations i suggest a quasi maximum likelihood method which requires only two levels of numerical integration the method maximizes the use of sample information given this numerical feasibility condition it is used for estimating a joint participation model of farm couples farm and off farm work the model yields conclusions about comparative advantages of men and women in farm off farm and housework which cannot be obtained with a more limited setup

purchasing power parity in the long run a test of the dollar pound exchange rate 1890 1978 this paper tests the purchasing power parity ppp hypothesis by analyzing t he long run tendency of the dollar pound exchange rate using data sin ce 1890 two different models are considered 1 a na ive model and 2 a modified monetary model the conditions of propor tionality and symmetry cannot be rejected when using the naive model the final results using the monetary model however indicate that t he existence of permanent deviations from ppp cannot be ruled out copyright 1987 by ohio state university press

purchasing power parity and cointegration the greek evidence from the 1920s abstract this paper presents empirical evidence which supports the purchasing power parity ppp hypothesis for three bilateral exchange rates involving the greek drachma during the 1920s using the technique of cointegration of economic time series the results are obtained for a period of high money supply growth and a high and variable rate of inflation which gave rise to large differentials in price movements between greece and the other countries the speed at which long run ppp was reached following a shock was 50 per cent per month confirming the results of other studies of ppp over the 1920s and explaining the supportive evidence for long run ppp even though data over a short period were used jel f31

modelling labour decisions of french agricultural households a joint model of labour decisions for farm couples is presented attention is given to operator and spouse participation decisions in the off farm labour market as well as the decision to use hired farm labour farm household labour choices which include both on farm and off farm work decisions and hired labour decisions are thus modelled as a household joint process the model is applied to a sample of french farm households empirical results illustrate the importance of spouse decisions on off farm labour participation and supply function structure they also show that operator labour and hired farm labour are complementary but wife labour and hired farm labour are substitutable

the relative effects of employed and unemployed job search a lthough many early models of job search assumed that job seekers were unemployed economists have come to recognize the importance of on the job search mattila 1974 for example found that roughly 60 of quitters experienced no unemployment between jobs implying that the majority of voluntary job changers engaged in on the job search the choice of search mode i e employed vs unemployed search has been modelled in the theoretical search literature barron and mccafferty 1977 burdett 1978 however there have been no attempts to estimate empirically the determinants of this choice 2 some researchers have however examined the resulting wages associated with these two types of search and found a greater wage return to employed than to unemployed search mattila 1969 black 1980 however because voluntarily unemployed search involves forgoing income burdett 1978 while employed search does not abstracting from voluntary reductions in hours incomemaximizing job seekers would never quit to search unless the expected net return to unemployed search exceeded that for employed search thus the previously mentioned empirical findings at first glance might appear to contradict the assumption of income maximization by job seekers because some workers do quit into unemployment 3 in this paper it is argued that previous attempts to compare the returns of employed and unemployed job search suffer from a selectivity problem specifically searchers who accept offers without experiencing any unemployment are likely to have unobservable variables such as informal job contacts and ability which will raise the relative return to employed search compared to that of voluntarily unemployed job seekers 4 providing an explanation for higher wages for on the job searchers than for unemployed searchers this paper estimates the relative wage effects of employed and unemployed search and the determinants of the choice of search mode i e employed vs unemployed search unlike earlier work mattila 1969 black 1980 the previously mentioned selectivity problems are accounted for this is the first attempt to estimate the determinants of choice of search mode 5 without adjusting for selectivity bias as regards employed vs unemployed search it is found that employed search is associated with greater expected wage offers than unemployed search controlling for measurable personal characteristics however accounting for selectivity the expected wage offer given unemployed search is greater than that given employed search finally the greater is the difference between the expected offer given unemployed and that given employed search the more likely one is to choose unemployed search these findings suggest that quitting to search unemployed may be a wealth maximizing decision received for publication november 5 1980 revision accepted for publication august 17 1981 university of illinois at urbana champaign and arizona state university respectively professor low is partially supported by a faculty grant from the graduate college at arizona state university the authors thank francine blau wallace hendricks and two anonymous referees for comments and suggestions i for a summary of this literature see lippman and mccall 1976 2 barron and mccafferty 1977 do estimate an aggregate time series model of the log of the proportion of quits entering unemployment as a function of the vacancy rate proxied by the help wanted advertising index however such a model ignores search that does not lead to quits and does not include variables beyond the vacancy rate that influence an individual s choice of search mode i it is also possible that the forgone earnings due to unemployed search could in principle be less than the possible savings in direct search costs due to unemployed search relative to employed search see burdett 1978 in this case a lower wage return to unemployed search could imply that quitting was based on income considerations further individuals may have quit for nonwage reasons 4 black 1980 found that other things equal those who planned to seek new employment but did not quit had significantly lower wage growth than those who did not plan to search and did not quit this finding strongly suggests the likelihood of a selectivity bias black 1980 p 227 black s 1976 1980 data the michigan panel study of income dynamics psid for his work on employed search did not allow him to distinguish employed and unemployed search

peasant household behaviour with missing markets some paradoxes explained a model of peasant household behavior under varying degrees of household specific food and labor market failures is constructed to show that these structural features can explain several well known patterns of peasant response which have often been attributed to peculiar motives presumed specific to peasants the model explains sluggish response to cash crops prices and high instability in perceived food and labor scarcities the key role of manufactured consumer goods prices in stimulating peasants effort in cash crops production the effectiveness of taxation as opposed to incentives in stimulating cash crops production and the key role of technological change in food production to enhance cash crop production results are obtained analytically in the case of one market failure and by numerical simulation with more than one

profitability efficiency and comparative advantage of african cattle meat and milk production the case of trypanotolerant village cattle production trypanosomiasis is a major constraint to increased food production in africa as it limits livestock production and mixed farming over an area of 10 million km2 the use of african trypanotolerant breeds of cattle is one approach to control trypanosomiasis that is being given increasing attention this paper examines under what circumstances trypanotolerant village cattle enterprises can be economically viable in regions of origin and areas of introduction on going production is analysed in four countries using cost benefit analyses comparative advantage and subsidies received are also estimated results indicate that resources for trypanotolerant cattle production are efficiently allocated as the sector has a comparative advantage and contributes effectively to the national welfare financial returns to producers are attractive and by comparing social and private prices important constraints are identified to improve profitability

cointegration how short is the long run abstract when testing for cointegration and faced with short sample periods it is common for researchers to turn to more frequently sampled observations that is to move from annual to quarterly or monthly data in order to increase the number of observations we argue that such a gain in the degrees of freedom is more apparent than real essentially cointegration is a long run concept and hence requires long spans of data to give tests for cointegration much power rather than merely large numbers of observations using monte carlo simulations we demonstrate this for four popular tests for cointegration

transactions costs and agricultural household supply response we develop and estimate a model of supply response when transactions costs create a situation where some producers buy others sell and others do not participate in markets we present two rationales for why producing households may have different relationships to the market proportional and fixed transactions costs using data on mexican corn producers we estimate an empirical model that allows for separate tests of the significance of both types of transactions costs revealing that both fixed and proportional transactions costs matter for the estimation the results provide consistent estimates of supply elasticity and measures of the relative importance of factors determining both proportional and fixed transactions costs

the effects of recent price liberalization on kenyan peri urban dairy a case study using the policy analysis matrix approach abstract when shortages of dairy products became severe in kenya early in 1992 prices of dairy products were de controlled to improve the incentives to producers the impact of that policy change is examined using the policy analysis matrix pam methodology a case study of the marketing chain involving small holder peri urban dairy producers in the nyeri region is considered the price policy reform removed only between 20 per cent and 30 per cent of the negative policy effects on most dairy producers depending on the technology used the market thus remains non competitive and a single large dairy processor was the biggest beneficiary of the policy change

agriculture under trade policy reform a quantitative assessment for india abstract under the impetus of the general agreement on tariffs and trade gatt accord the indian government is likely to extend the ongoing trade liberalization process to the agricultural sectors this paper provides a fresh quantitative assessment of such a policy of agricultural trade reform using a dynamic nine sector seven income classes computable general equilibrium model developed for india s seventh plan period 1985 90 the simulation outcomes suggest that the gains from agricultural trade liberalization may not be as large or as unambiguous as is often suggested the results also high light the possible conflict between successful agricultural trade liberalization and the requirement to reduce agricultural subsidies under gatt

beyond export led growth abstract in light of the adverse conditions in the current international economic environment this paper reassesses the feasibility of continuing to rely on manufacturing export led growth as the major development dynamic for most ldcs during the next decade this paper argues that after the initial stages of industrial development the emphasis in policy toward agriculture should shift from surplus extraction to surplus creation and to the generation of demand linkages with the rest of the economy the author compares the relative merits of two alternative open development strategies export led industrialization and agricultural demand led industrialization adli by means of several simulation experiments the experiments are performed with a computable general equilibrium model of a small low income semi industrial open economy which is a stylization of south korea of 1963 they are carried out in an international environment assumed to represent the next decade based on a rate of growth of international demand for imports of about half the 1960 1973 rate the results support the adli approach on all counts

local economic conditions and wage labor decisions of farm and rural nonfarm couples effects of geographical differences in local economic conditions on wage labor demand and wage labor participation decisions of rural couples are examined for current population survey households 1978 82 wage premiums are shown to exist for localities anticipating labor demand growth higher unemployment rates larger share of employment in services and higher costs of living these effects are stronger for males than females effects of local economic conditions on the probability of wage work are consistent with expected market wage and reservation wage effects and for farm households the probability of wage work increases when expected farm output prices decline or the wage increases

arima and cointegration tests of ppp under fixed and flexible exchange rate regimes real exchange rates between the united states and its major trading partners were calculated for the bretton woods and flexible exchange rate periods unit root tests indicate that purchasing power parity performed poorly in both periods tests for cointegration reveal limited instances in which it is possible to estimate the deviations from ppp as an error correcting model the estimated error correcting models indicate that foreign but not u s prices responded to deviations from ppp frenkel s 1981b finding that purchasing power parity ppp worked better during the 1920s than the 1970s caused considerable controversy for example davutyan and pippenger 1985 contend that the socalled collapse of ppp is a result of an increase in the relative importance of real versus monetary shocks they argue that the 1970s as opposed to the 1920s was characterized by real supply shocks and the international coordination of monetary policies the argument is that ppp did not fail rather there was an increase in the volatility of those factors giving rise to deviations from ppp hakkio 1984 reestimated ppp over the 1920s and 1970s using cross country tests i e sure estimates to improve the efficiency of his estimates he was able to support the hypothesis that ppp worked better in the 1970s than in the 1920s on the other hand papers by adler and lehman 1983 dornbusch 1980 frenkel 1981a junge 1985 and krugman 1978 report findings contrary to the ppp hypothesis moreover kenen and rodrik 1986 find that the volatility of real exchange rates has increased throughout the flexible rate period this paper tries to shed some light on the importance and persistence of the observed deviations from purchasing power parity under alternative exchange rate systems while it is interesting to compare ppp in the 1920s versus the 1970s it is equally useful to compare the 1960s versus the 1970s and 1980s if real supply shocks and lack of monetary coordination are characteristic of the latter period ppp should perform better in the 1960s to illustrate the issues involved consider the following econometric model of relative purchasing power

the new economics of labor migration this paper reviews selected theoretical and empirical developments in the field of labor migration economics the migration behavior of individuals differs in accordance with their perceived relative deprivation those who are relatively more deprived tend to have stronger incentive to migrate than those who are relatively less deprived moreover a reference group characterized by more income inequality is likely to generate more relative deprivation highly skilled workers are also more likely to migrate migration decisions are often made jointly by the migrant and nonmigrant with a contractual arrangement regarding the sharing of costs and returns the exchange of commitments to share income provides coinsurance of particular interest are the determinants of the speed of adoption of migration as an innovation and the characteristics associated with the delay in the adoption of innovation new econometric techniques including techniques for the analysis of qualitative dependent variables techniques that correct for sample selection bias and those for the analysis of longitudinal data have substantially benefited empirical research in this area new methods that can correct for the biased estimate of the wages particular individuals would receive at 2 or more locations at the same point in time allow researchers to test locational decsion making models estimates of these structural models of labor migration support the hypothesis that individuals respond to income incentives in making the decsion to migrate further research is needed on the pazzling observation that migrant workers earn less than native born workers with similar characteristics during the 1st few years after migration but more thereafter other topics that need further research include the macroeconomic effects of migration the microeconomic and macroeconomic relationships between aging and labor migration and the migration behavior of dual earner families

real exchange rates under the gold standard purchasing power parity is one of the most important equilibrium conditions in international macroeconomics empirically it is also one of the most hotly contested numerous recent studies for example have sought to determine the validity of purchasing power parity using data from the post bretton woods float and have reached different conclusions we assert that most such studies are flawed for two reasons first the post 1973 data contain by definition only a very limited amount of the low frequency information relevant for examination of long run parity second the dynamic econometric techniques used to model deviations from parity are typically quite crude with respect to admissible low frequency dynamics both deficiencies are rectified in the present paper with dramatic results we construct a new data set of 16 real exchange rates covering more than a century of the classic gold standard period and we study deviations from parity using long memory models that allow for subtle forms of mean

multi country evidence on the behavior of purchasing power parity under the current float abstract using panel data for the united states and 22 other oecd countries for the current float this paper presents evidence that despite substantial short term perturbations purchasing power parity actually performed much better than commonly believed average rates of growth of real exchange rates over long horizons bear little relationship either to average rates of growth of nominal exchange rates or to average inflation differentials thus implying a close to one to one relation between average rates of growth of nominal exchange rates and average inflation differentials panel data variants of standard unit root tests suggest that the real exchange rates of these countries can be characterized as mean reverting

panel stationarity tests for purchasing power parity with cross sectional dependence we investigate the purchasing power parity ppp hypothesis for a group of 17 countries using a new panel based test of stationarity that allows for arbitrary cross sectional dependence we treat the short run time series dynamics nonparametrically and thus avoid the need to fit separate and potentially misspecified models for the individual series the statistic is simple to compute and uses standard normal critical values even in the presence of a wide range of different deterministic components we also evaluate the behavior of the test using a factor model to approximate cross sectional dependence and find that it generally improves finite sample performance taken together these features provide a widely applicable solution to the problem of testing for stationarity versus unit roots in macro panel data the test finds significant evidence against the ppp null hypothesis being true even when allowance is made for structural breaks

sources of agricultural productivity growth and stagnation in sub saharan africa this paper examines sources of agricultural growth in sub saharan africa growth in the stock of traditional inputs land labor livestock remains the dominant source of output growth growth in modern input use was of secondary importance but still accounted for a 0 2 0 4 annual growth rate in three of four sub regions econometric results support earlier studies that suggest that land abundance may be a constraint on land productivity growth growth in agricultural exports and historic calorie availability had positive impacts on productivity these latter results suggest that positive feedback effects exist between export performance and food security on one hand and agricultural productivity on the other

getting agricultural prices right abstract are agricultural price policies in developing countries inimical to both growth and equity in recent critiques of govenment policy such a view has been repeatedly affirmed this paper takes the view that a positive analysis of the constraints under which price and tax policies must be set is seriously lacking and that without such understanding both the direction and the consequences of reform must remain uncertain it attempts to lay the groundwork for such analysis by specifying a number of hypotheses concerning government policies and their consequences

cross country disparity in agricultural productivity quantifying the role of modern seed adoption inequality of agricultural labour productivity across the developing world has increased substantially over the past 40 years this article asks to what extent did the diffusion of green revolution seed varieties contribute to increasing agricultural labour productivity disparity across the developing countries we find that 22 per cent of cross country variation in agricultural labour productivity can be attributed to the diffusion of high yielding seed varieties across countries and that the impact of such diffusion differed significantly across regions we discuss the implications of these findings for policy directed at increasing agricultural labour productivity in the developing world

the rocky road to reform trade industrial financial and agricultural strategies abstract this paper reviews recent issues of economic reform in developing countries based on studies undertaken for the world institute for development economics research wider emphasis is placed on a novel 3 gap adjustment model for savings investment trade and fiscal limitations at the macro level and a distinction between allocative and productive efficiency microeconomically issues of stabilization and adjustment and trade industrial policy financial reform privatization market deregulation and the agrarian question are discussed

moving toward markets labor allocation in rural china abstract china s economic reforms have brought rapid growth in rural off farm employment raising questions about the assumption that rural china is labor surplus and has poorly functioning factor markets we investigate this by testing for separability between household labor demand and supply using panel data we find that separability is rejected overall indicating that factor markets remain underdeveloped nonseparability however is associated with labor surplus in some areas and labor shortage in others moreover separability holds where substantial employment opportunities exist in the wider township suggesting that such employment promotes competitive allocation within villages as well as the inter village movement of resources

investment strategies to combat rural poverty a proposal for latin america abstract the economic crisis that started in 1980 has forced the latin american countries to implement drastic stabilization policies and structural adjustment programs the consequent appreciation of the real exchange rate has transformed agriculture into the most dynamic sector of the economy this creates the possibility of defining a forward looking rural development strategy that is consistent with this new role for agriculture and that has the potential of significantly lessening rural poverty starting from a social poverty map for the rural areas we identify a five pronged approach that includes 1 farm oriented rural development projects for the upper subfamily and family farms 2 household oriented rural development projects for the lower subfamily farms 3 access to addtional assets for the landless and subfamily farmers through land reform and colonization 4 employment creation and labor market rationalization and 5 the promotion of backward forward and final demand linkages with agriculture located in the rural areas

diversionary despots comparing autocracies propensities to use and to benefit from military force this article adds to recent research that has begun to systematically analyze the varied conflict propensities of autocracies using political incentive theory we develop hypotheses on the diversionary proclivities of three distinct types of autocratic regimes that contradict conventional wisdom and the findings of recent empirical studies to provide a full rendering of autocracies diversionary tendencies we test our hypotheses with generalized method of moments gmm models that capture reciprocal relationships among external military force and four of its potential domestic causes from 1950 to 2005 although our results provide only partial support for political incentive theory they demonstrate the utility of using properly identified reciprocal models and of analyzing refined conceptualizations of autocratic regimes we find that certain types of autocracies are more prone to use diversionary force and to benefit from it than others

the new development economics abstract the theory of rural organization based on rational peasants in environments where information is imperfect and costly provides a simple explanation for a wide variety of phenomena in ldcs it provides insights into both why sharecropping is so widespread and why it takes on the particular forms that it does it provides an explanation of the interlinkage of credit and land markets and of cost sharing the paper argues that this theory provides a better explanation of these phenomena than do the competing theories this theory can be viewed as an important application of a more general paradigm the imperfect information paradigm which has been useful in explaining economic phenomena under a wide variety of settings under competition oligopoly and monopoly in labor markets capital markets in insurance markets and product markets and in developed and less developed countries

livestock pricing policy in sub saharan africa objectives instruments and impact in five countries abstract livestock pricing policies in many developing countries are often instituted without a good appreciation of the consequences of such policies for allocative efficiency output and trade this paper evaluates in a comparative cross country context the objectives and instruments of livestock pricing policy in five sub saharan african countries ivory coast mali nigeria sudan and zimbabwe during the period 1970 1986 it assesses the extent to which pricing policy objectives have been attained and also estimates the effects of price interventions on output consumption trade and government revenues in order to draw out lessons for the future the empirical results indicate that in comparison with real border prices a certain degree of success was achieved in stabilising real domestic producer prices in the study countries the results also show that since the early 1980s there has been a gradual shift away from taxation of producers however consumers still appear to gain as much as producers in three of the study countries with negative consequences for foreign exchange earnings and government revenues the analysis reveals the importance of domestic inflation and exchange rates as key variables for livestock pricing policies and highlights the need to address the macroeconomic imbalances that cause exchange rate distortions and high domestic inflation at the same time that direct price distortions are being tackled

cointegration and tests of purchasing power parity nonstationarity in the levels of spot exchange rates and domestic and foreign price indices makes the use of conventional tests of the absolute version of purchasing power parity ppp inappropriate if ppp is true inter country commodity arbitrage ensures that deviations from a linear combination of spot exchange rates and domestic and foreign price levels should be stationary under these conditions exchange rates and price levels should form a cointegrated system we find the null hypothesis of no cointegration cannot be rejected for all five countries thus violating the long run absolute version of ppp

education and off farm work an investigation is presented of the determinants of educational selectivity in a framework that emphasizes the coordination of household members sectoral time allocation is based on members comparative advantage which in turn depends on the utilization and returns to schooling in the farm and nonfarm sectors central to the model is a knowledge spillover hypothesis that workers who participate in off farm work may still contribute knowledge to farm management estimation of the model is based on cross sectional chinese farm household data collected in 1990 from 204 households in sichuan province it is concluded that schooling does not enhance labour productivity when carrying out routine tasks that the contribution to farm efficiency by the most educated members is not affected by their non farm participation and that schooling increases labour market wage rates these empirical results give comparative advantage for the better educated farmers to work off the farm

the panel purchasing power parity puzzle does long run purchasing power parity ppp hold over the post 1973 floating exchange rate period panel unit root tests provide evidence of ppp that increases with the number of observations the strengthening of the evidence however is highly cyclical when the dollar appreciates at the end of the sample the evidence of ppp strengthens and when it depreciates the evidence weakens while these patterns cannot be explained by the specifications that are normally used to model real exchange rates the strengthening but not the cyclical pattern can be explained by a specifi cation that incorporates ppp restricted structural change

testing purchasing power parity under the null hypothesis of co integration this paper analyzes monthly data on the exchange rates and price indices of the eleven major industrial countries over the modern period of floating exchange rates it presents tests that are based upon the null hypothesis of cointegration the paper finds evidence that most country pairs not involving north american currencies have exchange rates and price indices that are cointegrated it estimates the error correction representation for the series that are cointegrated and it shows that the dynamic adjustment of the relationship between exchange rates and prices is accomplished almost entirely in the market for foreign exchange copyright 1991 by royal economic society

maize acreage response under differential prices in the republic of benin west africa price response of maize acreage in benin was estimated with a particular emphasis on whether the prices were producer prices in rural markets or retail prices in urban markets a second difference between prices was examined through a price adjustment model which takes into account the distortions caused by local units on maize price when one is concerned with the pricing system in the private marketing network relating rural and urban areas urban market price specification appeared to be the most relevant statistically in explaining acreage decisions in mono province price elasticity of acreage was 0 445 in this area while its value around 0 10 was not significant for benin as a whole the use of adjusted urban prices enabled an increase of 5 6 of the elasticity in mono province the urban vs rural difference was apparent but the coefficients of the price variable were not significant in equations with rural prices the latter were not as reliable as those of the urban market of dantokpa in cotonou city collected by the institute of statistics insae and the gtz project