information on product requirements or preferences, but does not significantly alter the variable costs of international trade reflected in distance to markets.

# **_Other Sources of Costs_**

Other non-market institutions, such as exporters’ clubs, can have an impact on trade costs. For instance, Negri and Porto (2008) assess the benefits of Burley tobacco clubs in Malawi. Tobacco clubs are formed by about 10 to 30 farmers that grow tobacco collectively and are designed to promote smallholder tobacco production. One of the major services provided by these clubs is access to selling floors in Malawi. In addition, club members jointly acquire inputs under group lending (that is, under a common loan that is repaid at the time of sales in the auction floors) and work together to monitor debt repayment and input use (preventing side selling of fertilizer, for instance). They also act collectively to purchase inputs collectively, often at lower prices.

Moreover, tobacco clubs contribute to economies of scale, particularly in transportation services to the selling floors. Finally, the clubs are instrumental in the development of supporting networks by encouraging the interchange of farming advice and the provision of labor assistance. Negri and Porto find that club members are much more productive than non-members. The tobacco club premium in yield (per acre) ranges from 40 to 74 percent. Members also earn between 45 and 89 percent more (per acre) than nonmembers via sales. This implies income gains from Burley membership of between 20 and 37 percent. The authors affirm that these gains would be equivalent to increases in tobacco prices, for instance due to improved market access abroad, lower transportation costs, or better infrastructure, of between 37 and 54 percent.

In another paper exploring the role of export costs in poverty reduction in rural Africa, Balat, Brambilla, and Porto (2008) claim that the marketing costs incurred when the commercialization of export crops requires intermediaries can lead to lower participation in export cropping and, thus, to higher poverty. The study uses data from the Uganda National Household Survey and highlights three major results: (i) farmers living in villages with fewer outlets for sales of agricultural exports are likely to be poorer than farmers residing in market-endowed villages; (ii) market availability leads to increased household participation in export cropping (coffee, tea, cotton, fruits); and (iii) households engaged in export cropping are less likely to be poor than subsistence-based households. The authors examine the role of complementary factors that provide market access and reduce marketing costs as key building blocks in the link between the gains from export opportunities and the poor.

Another source of trade costs relates to the lack of competitive markets in smaller countries. For example, Yeats (1990b) analyzes unit values of iron and steel African imports. He finds that 20 former French colonies in Africa paid a price premium of 20-30 percent, on average, over other importers for iron and steel imported from France over the period 1962-87. Losses associated with these prices totaled approximately 2 billion dollars by 1987. Yeats also finds that similar price premia (20-30 percent) were paid by former Belgian, British, and Portuguese colonies in Africa for imports of these products from the former colonists.

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