does exchange rate variability depress trade flows evidence from error correction models this paper examines the impact of exchange rate volatility on the trade flows of the g 7 countries in the context of a multivariate error correction model the error correction models do not show any sign of parameter instability the results indicate that the exchange rate volatility has a significant negative impact on the volume of exports in each of the g 7 countries assuming market participants are risk averse these results imply that exchange rate uncertainty causes them to reduce their activities change prices or shift sources of demand and supply in order to minimize their exposure to the effects of exchange rate volatility this in turn can change the distribution of output across many sectors in these countries it is quite possible that the surprisingly weak relationship between trade flows and exchange rate volatility reported in several previous studies are due to insufficient attention to the stochastic properties of the relevant time series copyright 1993 by mit press

smallholder market participation concepts and evidence from eastern and southern africa abstract this paper reviews the evidence on smallholder market participation with a focus on staple foodgrains i e cereals in eastern and southern africa in an effort to help better identify what interventions are most likely to break smallholders out of the semi subsistence poverty trap that appears to ensnare much of rural africa the conceptual and empirical evidence suggests that interventions aimed at facilitating smallholder organization at reducing the costs of intermarket commerce and perhaps especially at improving poorer households access to improved technologies and productive assets are central to stimulating smallholder market participation and escape from semi subsistence poverty traps macroeconomic and trade policy tools appear less useful in inducing market participation by poor smallholders in the region

complexity in structured finance we study complexity in the market for securitized products a market at the heart of the financial crisis of 2007 9 the complexity of these products rose substantially in the years preceding the financial crisis we find that securities in more complex deals default more and have lower realized returns the worse performance is economically meaningful a one standard deviation increase in complexity represents an 18 increase in default on aaa securities however yields of more complex securities are not higher indicating that investors did not perceive them as riskier our results are consistent with complexity obfuscating security quality

credit market constraints consumption smoothing and the accumulation of durable production assets in low income countries investments in bullocks in india in this paper we formulate and estimate a finite horizon structural dynamic model of agricultural investment behavior that incorporates the major features of low income agricultural environments income uncertainty constraints on borrowing and rental markets and the use of investment assets to generate income and smooth consumption the model is fit to longitudinal indian household data on farm profits bullock stocks and pump sets the estimated structural parameters are used to assess the effects on the life cycle accumulation of bullocks agricultural profits and welfare associated with complete markets and bullock liquidity and with second best policies that provide assured sources of income to farmers and weather insurance

strategic price complexity in retail financial markets abstract there is mounting empirical evidence to suggest that the law of one price is violated in retail financial markets there is significant price dispersion even when products are homogeneous also despite the large number of firms in the market prices remain above marginal cost and may even rise as more firms enter in a non cooperative oligopoly pricing model i show that these anomalies arise when firms add complexity to their price structures complexity increases the market power of the firms because it prevents some consumers from becoming knowledgeable about prices in the market in the model as competition increases firms tend to add more complexity to their prices as a best response rather than make their disclosures more transparent because this may substantially decrease consumer surplus in these markets such practices have important welfare implications

agroindustrialization globalization and international development an overview of issues patterns and determinants this paper offers an overview for a special issue on agroindustrialization globalization and international development it sets out a conceptual framework for understanding the links among these three broad phenomena and then discusses emerging issues and evidence concerning the factors conditioning agroindustrialization in developing countries and the subsequent effects on employment poverty and the natural environment we conclude with a research agenda

agrifood supply chain private sector standards and farmers health evidence from kenya this article evaluates the impact of adoption of european union eu private sector standards on farmers health in rural kenya the study utilizes cross sectional farm household level data collected in 2006 from a randomly selected sample of 439 small scale export farmers we estimate the casual impact by utilizing a two stage poisson regression model two stage standard treatment effect model as well as by regression based on propensity score to assess the robustness of the results using these techniques we demonstrate that the pesticide ascribed incidence of acute illness symptoms and the associated cost of illness significantly decrease with the adoption of standards ceteris paribus farmers who adopt standards experience 70 lesser incidence of acute illness and spent about 50 60 less on restoring their health than nonadopters although standards can potentially prevent resource poor smallholders from maintaining their position in lucrative export markets they can also result in positive changes in the health of those farmers who do adopt them as shown by these results this implies that if adopted on a large scale standards may reduce production externalities corroborating the view that they may serve as a catalyst to transform production systems in developing countries

private agri food standards implications for food policy and the agri food system abstract this paper provides a brief introduction to the evolution and nature of private food safety and quality standards highlighting the resultant impacts on the structure and modus operandi of supply chains for agricultural and food products and the challenges posed for processes of agricultural development it serves as an introduction to a series of papers that provide a comprehensive overview of the current state of knowledge regarding private food safety and quality standards in both an industrialised and developing country context in so doing it aims to provide a catalyst for further research on this rapidly evolving field of inquiry

exchange rate volatility and foreign trade evidence from thirteen ldc s this article investigates empirically the impact of real exchange rate volatility on the export flows of 13 less developed countries ldc s over the quarterly period 1973 1996 estimates of the cointegrating relations are obtained using johansen s multivariate procedure estimates of the short run dynamics are obtained for each country using the error correction technique the major results show that increases in the volatility of the real effective exchange rate approximating exchange rate uncertainty exert a significant negative effect on export demand in both the short run and the long run in each of the 13 ldc s these effects may result in significant reallocation of resources by market participants

poverty comparisons over time and across countries in africa abstract we use demographic and health surveys dhs to compare poverty at two or more points in time within and between african countries our welfare measure is an index resulting from a factor analysis of various household characteristics durables and household heads education an advantage of this measure is that for intertemporal and intraregional comparisons we need not rely on suspect price deflators and currency conversion factors the wide availability and similarity of questionnaires of the dhs facilitate comparisons over both time and countries our results generally show declines in poverty during the previous decade largely due to improvements in rural areas

why don t the poor save more evidence from health savings experiments using data from a field experiment in kenya we document that providing individuals with simple informal savings technologies can substantially increase investment in preventative health and reduce vulnerability to health shocks simply providing a safe place to keep money was sufficient to increase health savings by 66 percent adding an earmarking feature was only helpful when funds were put toward emergencies or for individuals that are frequently taxed by friends and relatives group based savings and credit schemes had very large effects

the economics of poverty traps and persistent poverty an asset based approach abstract longitudinal data on household living standards open the way to a deeper analysis of the nature and extent of poverty while a number of studies have exploited this type of data to distinguish transitory from more chronic forms of income or expenditure poverty this paper develops an asset based approach to poverty analysis that makes it possible to distinguish deep rooted persistent structural poverty from poverty that passes naturally with time due to systemic growth processes drawing on the economic theory of poverty traps and bifurcated accumulation strategies this paper briefly discusses some feasible estimation strategies for empirically identifying poverty traps and long term persistent structural poverty as well as relevant extensions of the popular foster greer thorbecke class of poverty measures the paper closes with reflections on how asset based poverty can be used to underwrite the design of persistent poverty reduction strategies

prominence complexity and pricing this paper analyzes prominence in a homogeneous product market where two firms simultaneously choose both prices and price complexity levels complexity limits competing offers comparability and results in consumer confusion confused consumers are more likely to buy from the prominent firm in equilibrium there is dispersion in both prices and price complexity the nature of equilibrium depends on prominence compared to its rival the prominent firm makes higher profit associates a smaller price range with lowest complexity puts lower probability on lowest complexity and sets a higher average price however higher prominence may benefit consumers and conditional on choosing lowest complexity the prominent firm s average price is lower which is consistent with confused consumers bias

small farmers and big retail trade offs of supplying supermarkets in nicaragua summary in nicaragua and elsewhere in central america small scale farmers are weighing the risks of entering into contracts with supermarket chains we use unique data from cooperatives supplying supermarkets to study the effect of supply agreements on producers mean output prices and price stability we find that prices paid by the domestic retail chain approximate the traditional market in mean and variance while mean prices paid by walmart are significantly lower than the traditional market however the walmart contract is found to systematically reduce price volatility we find some evidence however that farmers may be paying too much for this contractual insurance against price variation

price competition under limited comparability this paper studies market competition when firms can influence consumers ability to compare market alternatives through their choice of price formats we introduce random graphs as a tool for modelling limited comparability of formats our main results concern the interaction between firms equilibrium price and format decisions and its implications for industry profits and consumer switching rates we show that narrow regulatory interventions that aim to facilitate comparisons may have adverse consequences for consumer welfare finally we argue that our limited comparability approach provides a new perspective into the phenomenon of product differentiation

welfare dynamics in rural kenya and madagascar this paper presents comparative qualitative and quantitative evidence from rural kenya and madagascar in an attempt to untangle the causality behind persistent poverty we find striking differences in welfare dynamics depending on whether one uses total income including stochastic terms and inevitable measurement error or the predictable structural component of income based on a household s asset holdings our results suggest the existence of multiple dynamic asset and structural income equilibria consistent with the poverty traps hypothesis furthermore we find supporting evidence of locally increasing returns to assets and of risk management behaviour consistent with poor households defence of a critical asset threshold through asset smoothing

the effects of exchange rate volatility on exports some new estimates investigations of the impact of exchange rate volatility on exports have not allowed for the integrated non stationary of the variables employed in estimation the results reported in this note are suggestive that in the context of an error correction framework real exchange rate volatility has a significant impact on exports

the effects of macroeconomic stability on foreign trade an analysis for spain 1986 2000 two main factors underlie the rebirth of interest in the study of the influence of the real exchange rate on trade the reduction of its volatility and the current trend towards price stability the objective of this study is to analyse the effects of the process of nominal convergence required of the european member states for the fulfilment of monetary integration on foreign trade flows the case of spain which is especially interesting in this context is studied for the period 1986 to 2000 the results of estimating the aggregate functions of the export and import of goods shows how macroeconomic stability has altered the behaviour of trade with respect to the two basic determinants income and prices how it has caused a significant structural change in the real exchange rate and finally how it has laid the explanatory bases for transactions in the twenty first century with the single currency the euro

sugarcane outgrowers in ethiopia forced to remain poor contract farming is often seen as a panacea to many of the challenges faced by agricultural production in developing countries given the large heterogeneity of contract farming arrangements it is debatable whether all kinds of contract farming arrangements offer benefits to participating smallholders we apply matching methods to analyze the effects of a public sugarcane outgrower scheme in ethiopia participation in the outgrower scheme significantly reduces the income and asset stocks of outgrowers who contributed irrigated land to the outgrower scheme while the effect was insignificant for outgrowers who contributed rain fed land we provide several explanations and discuss policy implications

impact of contract farming on income linking small farmers packers and supermarkets in china summary this study compares contract and non contract growers of apples and green onions in shandong province china in order to explore the constraints on participation and the impact of contract farming on income we find little evidence that firms prefer to work with larger farms though all farms in the area are quite small using a heckman selection correction model we find that contract farming raises income even after controlling for observable and unobservable household characteristics these results suggest that contract farming can help raise small farm income though questions remain regarding the number of farmers that can be brought into such schemes 2009 elsevier ltd all rights reserved

contract farming and food security contract farming has often been associated with an increase in the income of participating households it is unclear however whether contract farming increases other aspects of household welfare using data from six regions of madagascar and a selection on observables design in which we control for a household s marginal utility of participating in contract farming which we elicited via a contingent valuation experiment we show that participating in contract farming reduces the duration of a household s hungry season by about ten days on average and that it makes participating households about 20 percent more likely to see their hungry season end at any point in time further we find that these effects are more pronounced for households with a larger number of children and for households with a larger number of girls this is an important result as children especially girls often bear the burden of food insecurity

saving and liquidity constraints this paper is concerned with the theory of saving when consumers are not permitted to borrow and with the ability of such a theory to account for some of the stylized facts of saving behavior the models presented in the paper seem to account for important aspects of reality that are not explained by traditional life cycle models copyright 1991 by the econometric society

price competition with consumer confusion this paper proposes a model in which identical sellers of a homogenous product compete in both prices and price frames i e ways to present price information we model price framing by assuming that firms frame choices affect the comparability of their price offers consumers may fail to compare prices due to frame differentiation and due to frame complexity in the symmetric equilibrium the firms randomize over both price frames and prices and make positive profits this result is consistent with the observed coexistence of price and price frame dispersion in the market we also show that i the nature of equilibrium depends on which source of consumer confusion dominates and ii an increase in the number of firms can increase industry profits and harm consumers

the impact of the tomato agroindustry on the rural poor in mexico this article addresses the issue of whether the tomato agroindustry tai has been an effective instrument in the reduction of rural poverty the tai is by far the most important agroindustry in mexico in terms of exports and employment creation most of the laborers employed by the tai in northwest mexico are temporary migrants coming from poverty stricken regions in southern mexico conditions of poverty induced migration are explained the characteristics and strategies of large modern tomato enterprises are analyzed the main conclusion is that migrant income earned in the tomato fields and packing plants is fundamental for the bare survival in villages in poverty stricken regions however this does not provide a solution to poverty alleviation because migrant income is not sufficient to contribute to capital formation in the migrating communities or the to create the conditions for endogenous local development

contract farming smallholders and rural development in latin america the organization of agroprocessing firms and the scale of outgrower production abstract this paper demonstrates how contract farming functions as an economic institution and explores the causes of the observed variation in the scale of outgrower production in latin america we outline how market imperfections and transaction costs influence the decision of agroprocessing firms to contract out vertically integrate or use spot markets to obtain raw product the paper demonstrates how market conditions are likely to be associated with particular outgrower characteristics under contract farming an analysis of the mexican frozen vegetable industry illustrates determinants of successful and unsuccessful small scale contracting and suggests alternative policies to promote contract farming with smallholders

agricultural growth and economic development a view through the globalization lens this article re visits the age old proposition that agriculture growth contributes to overall economic development and asks whether the relationship still holds in an increasingly globalized world there is overwhelming empirical support for the above proposition indeed it is hard to find exceptions barring a few city states where sustained economic development has not been preceded by robust agricultural growth however there are a large number of countries that have witnessed neither agricultural growth nor economic development even in countries where agricultural growth has been significant dramatic inter regional differences persist this article examines the factors that contribute to or constrain the process of agricultural transformation does the process of globalization and the resultant changes in agrifood systems offer new opportunities for agriculture led growth or will it further marginalize excluded countries regions and groups the factors that cause exclusion are examined both in terms of globalization forces and in terms of domestic shortcomings in policies and governance policy interventions that attempt to reduce the costs of transition to a globalized agricultural system are explored including safety nets for those left behind

impacts of supermarkets on farm household nutrition in kenya summary many developing countries experience a food system transformation with a rapid growth of supermarkets we analyze impacts of supermarkets on farm household nutrition with survey data from kenya participation in supermarket channels is associated with significantly higher calorie vitamin a iron and zinc consumption we use simultaneous equation models to analyze impact pathways supermarket supplying households have higher incomes a higher share of land under vegetables and a higher likelihood of male control of revenues furthermore income and the share of land under vegetables have positive impacts while male control of revenues has negative impacts on dietary quality policy and further research implications are discussed

governance and trade in fresh vegetables the impact of uk supermarkets on the african horticulture industry production of fresh vegetables for export has grown rapidly in a number of countries in sub saharan africa over the last decade this trade brings producers and exporters based in africa together with importers and retailers in europe large retailers in europe play a decisive role in structuring the production and processing of fresh vegetables exported from africa the requirements they specify for cost quality delivery product variety innovation food safety and quality systems help top determine what types of producers and processors are able to gain access to the fresh vegetables chain and the activities they must carry out the control over the fresh vegetables trade exercised by uk supermarkets has clear consequences for inclusion and exclusion of producers and exporters of differing types and for the long term prospects for the fresh vegetables industry in the two major exporting countries studied kenya and zimbabwe

the system of rice intensification and its impacts on household income and child schooling evidence from rural indonesia the yield potential of a set of improved rice management practices known as the system of rice intensification sri has attracted much attention yet we know surprisingly little about sri s socio economic impact using data from indonesia in 2009 this study assesses the impact of sri on household incomes and child schooling we find that sri generates significant estimated yield gains however because sri induces a reallocation of family labor from non farm to farm sri users enjoy no household income gains despite the increased labor demand for farming we find no evidence that sri has a child labor effect

small farmers ngos and a walmart world welfare effects of supermarkets operating in nicaragua despite more than a decade of ngo and government activities promoting developing world farmer participation in high value agricultural markets evidence regarding the household welfare effects of such initiatives is limited this paper analyzes the geographic placement of supermarket supply chains in nicaragua between 2000 and 2008 and uses a difference in difference specification on measures of supplier and non supplier assets to estimate the welfare effects of small farmer participation though results indicate that selling to supermarkets increases household productive asset holdings they also suggest that only farmers with advantageous endowments of geography and water are likely to participate

profits from participation in high value agriculture evidence of heterogeneous benefits in contract farming schemes in southern india abstract this paper assesses the variable impact of participation in high value agriculture through contract farming arrangements in southern india using survey data for 474 farmers in four commodity sectors gherkins papaya marigold and broiler an endogenous switching model is used to estimate net profits from participation findings suggest that average treatments effect vary widely across contract commodities papaya and broiler contracting offer clear net gains for participants whereas marigold contracting leaves participants worse off for gherkins while contracting holds net gains for participating farmers overall this is true of contracts with some firms but not others the standard deviations of point estimates of treatment effects are quite large indicating variability in profit gains even within the same commodity sectors thus notwithstanding the sign of average treatment effects contract farming arrangements have diverse impacts on income for individual farmers and these could have implications for sustained participation of farmers in high value agriculture

poverty livelihood and class in rural south africa abstract using data from a national living standards survey undertaken in late 1993 this paper disaggregates and explores the economics of livelihood generation and class in rural south africa in an effort to contribute to the ongoing and vociferous debate in south africa about poverty and its alleviation pursuant to the suggestion of participants in a recent participatory poverty assessment this paper analyzes what might be termed the class structure of poverty after exploring the range of claiming systems and livelihood tactics available in rural south africa the paper offers a first look at who the poor are by disaggregating the rural population into discrete livelihood strategy classes non parametric regression methods are used to then estimate and graphically explore the nature of the livelihood mapping between endowments and real incomes in addition to identifying those endowment combinations that map to consumption levels below the poverty line the asset basis of poverty the topography of the estimated livelihood mapping helps identify the constraints that limit household s ability to effectively utilize their assets and endowments these results suggest that poverty is a matter of not only having few assets but also of constraints which limit the effectiveness with which those assets are used and poverty and livelihood policy needs to be designed accordingly

trade standards and poverty evidence from senegal summary in the debate on trade and poverty it is argued that standards act as trade barriers and cause marginalization of the poor this paper quantifies income and poverty effects of high standards trade and integrates labor market effects by using company and household survey data from the vegetable export chain in senegal we find that exports grew sharply despite increasing standards contributing importantly to rural incomes and poverty reduction tightening standards induced a shift from smallholder contract farming to integrated estate production altering the mechanism through which poor households benefit through labor markets instead of product markets

a more general model of price complexity this paper considers a model of competition in prices and price complexity levels which accommodates concave and convex confusion technologies in symmetric equilibrium the probability of using high complexity increases in the number of firms in the limit as the number of competitors goes to infinity firms use high complexity almost surely but the impact on consumer welfare depends on the characteristics of the confusion technology specifically industry profits converge to the highest level with concave confusion technologies and to the lowest level when with convex confusion technologies an improvement in consumer sophistication increases consumer welfare but does not reduce market complexity

the impact of farm input subsidies on maize marketing in malawi abstract this paper investigates the effects of subsidised fertilizer on marketing of maize in malawi it uses the nationally representative two wave integrated household panel survey ihps data of 2010 and 2013 the results suggest that subsidised fertilizer on average increases farmers maize market participation as sellers total quantity of maize sold and maize commercialisation in addition participation in subsidised fertilizer programme is found to increase the probability of farmers to be net sellers and increases net quantity of maize sold however the study finds no evidence of effect on net quantity of maize bought and on household maize self sufficiency these results suggest that the farm input subsidy programme has contributed toward an increased level of maize market supply engagement for small farmers and in this sense the policy has the potential to provide the wider external benefits furthermore the results have implication on the sustainability of the subsidy programme policy formulation and design of programmes for the agricultural sector and small farmers in developing countries

exchange rate volatility and international trading strategy abstract it is usually argued that an increase in exchange rate volatility reduces the volume of international trade as trading firms are risk averse this paper shows that exporting firms benefit under fairly general conditions from an increase in exchange rate volatility firms optimally adjust their export volumes to the level of the exchange rate exporting is an option which is exercised if profitable in addition the paper presents conditions under which the volume of international trade grows with exchange rate volatility

exchange rate volatility and exports from east asian countries to japan and the usa the purpose of this article is to investigate the impact of exchange rate volatility on exports in four east asian countries hong kong south korea singapore and thailand specifically this article aims at determining whether the bilateral real exchange rate volatility between an east asian country and its trading partner negatively affects the exports of the east asian country considering the dominant roles of the usa and japan as trading partners of those east asian countries this article focuses on the quarterly export volumes of east asian countries to the us and japan for the period from 1981 to 2004 except for the case of hong kong s exports to japan cointegration tests and estimations of error correction models indicate exchange rate volatility has negative impacts on exports either in the short run or in the long run or both on the other hand the real gdp of importing countries and depreciation of real bilateral exchange rates turn out in general to have positive effects of special

supermarkets wholesalers and tomato growers in guatemala the article shows the asset related determinants and the impacts of the participation of small farmers in supermarkets versus traditional market channels in guatemala compared to farmers selling only to the traditional market channels farmers selling to supermarket channels are larger but are in the upper tier of the small farmer category have more capital and are much more specialized in commercial horticulture in general and in tomatoes in particular while they have higher yields they also have higher input use including use of chemicals in fact they severely overuse pesticides and fungicides moreover these greater input expenditures mean that their profit rates are roughly similar to those of farmers in the traditional market channel supermarket channel farmers prefer the more demanding wholesale supermarket channel because it offers lower risks and lower transaction costs to market a variety of quality grades of tomatoes all year long in turn the supermarkets who do not buy direct but rather source from a few specialized dedicated wholesalers rely on this year round supply lower transaction costs and consistency of quality

public private partnerships and collective action in high value fruit and vegetable supply chains accessing developed country food markets entails meeting stringent food safety requirements food retailers impose protocols relating to pesticide residues field and pack house operations and traceability to enable smallholders to remain competitive in such a system new institutional arrangements are required in particular public private partnerships can play a key role in creating farm to fork linkages that can satisfy market demands for food safety while retaining smallholders in the supply chain furthermore organized producer groups monitoring their own food safety standards through collective action often become attractive to buyers who are looking for ways to ensure traceability and reduce transaction costs this paper compares the ways in which small producers of fruits and vegetables in kenya and india have coped with increased demands for food safety from their main export markets

global value chains large scale farming and poverty long term effects in senegal this paper presents panel data evidence on the impact of expansion of global value chains and large scale export oriented farms in developing countries over almost a decade we estimate the income effects of wage employment on large scale farms in the horticultural export sector in senegal using data from two survey rounds covering a seven years period of rapid expansion of the sector we estimate average income effects as well as heterogeneous income effects using fixed effects and quantile fixed effects regressions we find that poverty and inequality reduced much faster in the research area than elsewhere in senegal employment in the horticultural export sector is associated with higher household income and the income effect is strongest for the poorest households expansion of the horticultural export sector in senegal has been particularly pro poor through creating employment that is accessible and creates substantial income gains for the poorest half of the rural population these pro poor employment effects contrast with insights in the literature on increased inequality from rural wage employment

commercialization of the small farm sector and multidimensional poverty abstract global poverty rates have declined considerably but the number of people living in extreme poverty remains high many of the world s poor are smallholder farmers agricultural commercialization meaning a shift from subsistence to more market oriented farming can play a central role in improving smallholder welfare previous studies evaluated the impact of agricultural commercialization on income poverty but whether income gains from commercialization are really used for satisfying basic needs was hardly analyzed up till now here we evaluate the effect of commercialization on income poverty as well as on the multidimensional poverty index that looks at deprivations in terms of education nutrition health and other dimensions of living standard using data from 805 farm households in kenya we estimate average treatment effects and also analyze impact heterogeneity with quantile regressions results show that commercialization reduces both income poverty and multidimensional poverty the magnitude of the income gains is positively correlated with income level meaning that market linkage support for marginalized farms may be needed to avoid rising inequality however the effect in terms of reducing basic needs deprivations is stronger for the poorest households suggesting that agricultural commercialization contributes effectively to achieving the sustainable development goals

agricultural commercialization and diversification processes and policies abstract agricultural commercialization and diversification involve the gradual replacement of integrated farming systems by specialized enterprises for crop livestock poultry and aquaculture products changes in product mix and input uses are determined largely by the market forces during this transition commercialization of agricultural production is an endogenous process and is accompanied by economic growth urbanization and withdrawal of labor from the agricultural sector this paper provides a selective overview and synthesis of the issues involved in the commercialization and diversification process of agriculture drawing in significant part from the papers in this volume based on an assessment of the process observed in selected countries we show that the commercialization process should not be expected to be a frictionless process and significant equity and environmental consequences may occur at least in the short to medium term particularly when inappropriate policies are followed however we highlight that appropriate government policies including investment in rural infrastructure and crop improvement research and extension establishment of secure rights to land and water and development and liberalization of capital markets can help alleviate many of the possible adverse transitional consequences

welfare effects of vegetable commercialization evidence from smallholder producers in kenya we investigate whether smallholder horticultural commercialization is able to as often stipulated reduce poverty in developing countries with the help of panel household survey data from kenya we find evidence for a positive association between vegetable commercialization and household welfare even when controlling for unobserved heterogeneity across households interestingly the effect differs depending on which market vegetables are being produced for commercialization through the export market is consistently positively associated with income but not wealth while there is some limited evidence for commercialization through the domestic market channel being positively related to welfare measured by asset holdings and income depending on the specification

diagnosing consumer confusion and sub optimal shopping effort theory and mortgage market evidence mortgage loans are leading examples of transactions where experts on one side of the market take advantage of consumers lack of knowledge and experience we study the compensation that borrowers pay to mortgage brokers for assistance from application to closing two findings support the conclusion that confused borrowers overpay for brokers services i a model of effective shopping shows that bor rowers sacrifice at least 1 000 by shopping from too few brokers ii borrowers who compensate their brokers with both cash and a commission from the lender pay twice as much as similar borrowers who pay no cash jel d12 d14 g21 we study a large and financially complex expenditure that the majority of consumers make only a few times in their lives the payment for mortgage origination services in these transactions information is not only imperfect but traditional market practices have likely contributed to consumer confusion these payments range from 0 to 30 000 for mortgages of normal size mortgage brokers receive payments from both borrowers and from wholesale lenders on most loans broker fees paid in cash by the borrower are usually broken down into more than a dozen individual items such as origination fee discount points funding fee and doc prep in addition to these cash payments about half of the value that the bor rower transfers to the broker takes the form of a payment from the wholesale lender to the mortgage broker the borrower bears the burden of this part of the payment in the form of a higher interest rate on the loan these payments compensate mortgage brokers for arranging mortgage loans we stress that this paper is about how and how much borrowers pay their brokers for origination services the broker is an administrator of the process of loan origination the broker bears none of the risk of default on the mortgage so that risk is not a determinant of the broker s compensation under standard theories of pricing because consumers enter the mortgage market infrequently and because features of the market make it difficult to learn the best price mortgage origination pricing

farmers welfare and changing food prices nonparametric evidence from rice in madagascar this paper uses nonparametric density estimation and kernel smoothing techniques to examine the instantaneous distributional implications of rice price changes in madagascar while many farmers do not participate in product markets as either buyers or sellers and net sales or marketable surplus are fairly small for many others the roughly one third of rice farmers who fall below the poverty line face significant negative first order welfare effects from increases in the mean or variance of rice prices conversely the first order gains from rice price increases are highly concentrated among the largest rice farmers and particular regions in madagascar

catering to investors through security design headline rate and complexity this study investigates how banks design financial products to cater to yield seeking investors we focus on a large market of investment products targeted exclusively at households retail structured products these products typically offer a high return under their best case scenario the headline rate that is nested in a complex payoff formula using a text analysis of the payoff formulas of the 55 000 products issued in europe from 2002 to 2010 we measure product headline rates complexity and risk over this period product headline rates depart from the prevailing interest rates as the latter decrease complexity increases and risky products become more common in the cross section the headline rate of a product is positively correlated with its level of complexity and risk higher headline rate more complex and riskier products appear more profitable to the banks distributing them our results suggest that financial complexity is a by product of banks catering to yield seeking investors

smallholder participation in contract farming comparative evidence from five countries summary supermarkets specialized wholesalers processors and agro exporters are transforming the marketing channels into which smallholder farmers sell produce in low income economies we develop a conceptual framework with which to study contracting between smallholders and a commodity processing firm we then synthesize results from empirical studies of contract farming arrangements in five countries ghana india madagascar mozambique and nicaragua the resulting meta narrative documents patterns of participation the welfare gains associated with participation reasons for nonparticipation the significant extent of contract noncompliance and the considerable dynamism of these value chains as farmers and firms enter and exit frequently

exchange rate volatility international trade and the value of exporting firms abstract increased exchange rate volatility positively affects the value of exporting firms via the price and volume impacts of exchange rates and also makes an exporting strategy more attractive relative to the direct investment investment in export production capacity could therefore be a positive function of exchange rate volatility firms would also be more willing to sustain losses i e to engage in dumping before they abandon their export markets the effect on the volume and value of trade is ambiguous

one kind of freedom poverty dynamics in post apartheid south africa abstract a 1993 south african living standards survey documented the legacy of apartheid in the form high levels of inequality and human insecurity drawing on a 1998 re survey of households in the 1993 study this paper explores whether this legacy has been superseded or whether apartheid s end has been only one kind of freedom that has left households in a poverty trap from which they cannot escape after proposing a theoretically grounded dynamic poverty typology that distinguishes stochastic from structural poverty transitions the paper goes on to estimate that significant numbers of the south african poor are potentially trapped in a structural poverty trap and lack the means to escape poverty over time

conditional exchange rate volatility and the volume of international trade evidence from the early 1900s exports from britain to the united states from 1900 to 1940 are examined to ascertain the effect of exchange rate volatility on the volume of trade in addition to using a rolling standard deviation measure of exchange rate uncertainty the conditional variance of the exchange rate series modeled as a generalized autoregressive conditional heteroskedastic process is used to generate an alternative measure of exchange rate uncertainty the results of estimation using the two measures of exchange rate volatility suggest that increases in the volatility of the real exchange rate reduce the volume of trade copyright 1992 by mit press

finding missing markets and a disturbing epilogue evidence from an export crop adoption and marketing intervention in kenya in much of the developing world many farmers grow crops for local or personal consumption despite export options that appear to be more profitable thus many conjecture that one or several markets are missing this paper reports on a randomized controlled trial conducted by drumnet in kenya that attempts to help farmers adopt and market export crops drumnet provides smallholder farmers with information about how to switch to export crops makes in kind loans for the purchase of the agricultural inputs and provides marketing services by facilitating the transaction with exporters the experimental evaluation design randomly assigns pre existing farmer self help groups to one of three groups 1 a treatment group that receives all drumnet services 2 a treatment group that receives all drumnet services except credit or 3 a control group after one year drumnet services led to an increase in production of export oriented crops and lower marketing costs this translated into household income gains for new adopters however one year after the study ended the exporter refused to continue buying the cash crops from the farmers because the conditions of the farms did not satisfy european export requirements drumnet collapsed in this region as farmers were forced to sell to middlemen and defaulted on their loans the risk of such events may explain at least partly why many seemingly more profitable export crops are not adopted

the impact of exchange rate volatility on international trade flows despite the best efforts of economists a basic paradox as to the impact of exchange rate volatility on trade flows remains unresolved at both the theoretical and empirical level this paper surveys the vast literature in the area in an attempt to identify major issues which have contributed to the development of the debate and examine whether any general direction for consensus may be found

saving in developing countries theory and review in the literature on economic development much of the interest in saving has been focused on the relation between saving and growth but saving is not only about accumulation it is about smoothing consumption in the face of volatile and unpredictable income and helping to ensure the living standards of poor people whose lives are difficult and uncertain this paper develops a model of households which cannot borrow but which accumulate assets as a buffer stock to protect consumption when incomes are low such households dissave as often as they save do not accumulate assets over the long term and have on average very small asset holdings but their consumption is markedly smoother than their income much of the evidence is as consistent with this view of saving as it is incosistent with standard views of smoothing over the life cycle and with explanations of the link between saving and growth in terms of life cycle saving behavior consumption smoothing is also a useful way of thinking about government policy where volatility in the world prices of taxed commodities can generate sharp fluctuations in government revenues as well as reallocations of revenue between the private and public sectors many important policy issues in developing countries hinge on issues of consumption and smoothing and research on these issues is currently likely to be more productive than work on the relation between saving and growth

supermarkets farm household income and poverty insights from kenya summary the expansion of supermarkets in developing countries may have important implications for poverty and rural development while previous studies have compared farm profits between participants and non participants in supermarket channels wider income effects have hardly been analyzed moreover most existing studies do not account for structural differences between the two groups we address these issues by using endogenous switching regression and building on a survey of vegetable farmers in kenya participation in supermarket channels is associated with a 48 gain in average household income which also contributes to poverty reduction to realize these benefits on a larger scale will require institutional support

understanding developing country strategic responses to the enhancement of food safety standards this paper explores the competing concepts of standards as barriers and standards as catalysts in the context of food safety standards in international trade in agricultural and food products through a review of existing evidence of the impact of food safety standards on developing country exports of agricultural and food products and the results of a series of country and product specific case studies it is suggested that food safety standards can act as both a barrier to trade and the basis of competitive positioning for developing countries in international markets this suggests that broad conclusions about the trade effects of food safety standards on developing countries are problematic rather the level and ways in which agricultural and food exports are impacted can be product country standard and even firm specific

the impact of the post 1972 floating exchange rate regime on us exports by employing the techniques of cointegration and error correction models this article empirically investigates the impact of the post 1972 floating exchange rate regime on the volume of us bilateral exports to canada germany japan and the uk the econometric models specified in the analysis were estimated using quarterly data for the sample period 1959 1 1997 4 the empirical results provide evidence that the post 1972 exchange rate regime is less conducive to trade than the bretton woods fixed exchange rate regime

non traditional crops traditional constraints long term welfare impacts of export crop adoption among guatemalan smallholders this study documents the long term welfare effects of household non traditional agricultural export ntx adoption the analysis uses a unique panel dataset which spans the period 1985 2005 and employs difference in differences estimation to investigate the long term impact of non traditional agricultural export adoption on changes in household consumption status and asset position in the central highlands of guatemala given the heterogeneity in adoption patterns the analysis differentiates the impact estimates based on a classification of households that takes into account the timing and duration of non traditional agricultural export adoption the results show that while on average welfare levels have improved for all households irrespective of adoption status and duration the extent of improvement has varied across groups long term adopters exhibit the smallest increase in the lapse of two decades in spite of some early gains conversely early adopters who withdrew from non traditional agricultural export production after reaping the benefits of the boom period of the 1980s are found to have fared better and shown greater improvements in durable asset position and housing conditions than any other category