metadata: authors: 0: author: Iimi,Atsushi
count: Comoros
docna: 0: docna: Hidden Treasures in the Comoros : The Impact
            of Inter-Island Connectivity Improvement on Agricultural Production
docty: Policy Research Working Paper
subtopic: Transport Services,Crops and Crop Management Systems,Climate Change and Agriculture,Food Security,Inequality
teratopic: Transport,Agriculture,Poverty Reduction
abstracts: cdata!: The paper revisits the traditional
            transport-agricultural growth nexus. Connectivity is
            particularly challenging for small island developing states,
            such as the Comoros, where domestic markets are limited and
            transport and transaction costs tend to be high. Using
            household survey data from Comoros, the paper shows that
            significant untapped economic potential exists in the
            domestic market. The analysis shows that better transport
            connectivity increases crop production and market sales.
            Accessibility to Moroni, the primary market in the country,
            and inter-island connectivity are of particular importance.
            Not only transport infrastructure, but also services are
            important. Access to intermediary services, such as
            cooperatives and collectors, is also found to have a
            positive impact on crop production and market sales.
geo_reg_key: 517191
repnme: repnme: Hidden Treasures in the Comoros : The
            Impact of Inter-Island Connectivity Improvement on
            Agricultural Production
display_title: Hidden Treasures in the Comoros :
            The Impact of Inter-Island Connectivity Improvement on
            Agricultural Production
listing_relative_url: /research/2019/08/31315502/hidden-treasures-comoros-impact-inter-island-connectivity-improvement-agricultural-production
topicv3: Agriculture and Food Security m1326205 435,Crop Production m1326627 174,Transport m1326661 135,Poverty m1326687 695,Transport Infrastructure m1327632 1803
publishtoextweb_dt: 2019-08-06T00:00:00Z
historic_topic: Transport,Agriculture,Poverty Reduction
no_of_pages: 23
author_keys: 0: author_key: 914707
model_extractions: Policy Research Working Paper 8960

# Hidden Treasures in the Comoros

The Impact of Inter-Island Connectivity Improvement on Agricultural Production _Atsushi Iimi_ Transport and Digital Development Global Practice August 2019
Policy Research Working Paper 8960

# **Abstract**

The paper revisits the traditional transport-agricultural growth nexus. Connectivity is particularly challenging for small island developing states, such as the Comoros, where domestic markets are limited and transport and transaction costs tend to be high. Using household survey data from Comoros, the paper shows that significant untapped economic potential exists in the domestic market. The analysis shows that better transport connectivity increases crop production and market sales. Accessibility to Moroni, the primary market in the country, and inter-island connectivity are of particular importance. Not only transport infrastructure, but also services are important. Access to intermediary services, such as cooperatives and collectors, is also found to have a positive impact on crop production and market sales.

This paper is a product of the Transport and Digital Development Global Practice. It is part of a larger effort by the World Bank to provide open access to its research and make a contribution to development policy discussions around the world. Policy Research Working Papers are also posted on the Web at http://www.worldbank.org/prwp. The author may be contacted at aiimi@worldbank.org.

_The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent._ Produced by the Research Support Team
# **Hidden Treasures in the Comoros:**

**The Impact of Inter-Island Connectivity Improvement on Agricultural Production**

Atsushi Iimi<sup>¶</sup> Africa Infrastructure, Transport Global Practice World Bank Group Key words: Agricultural production; Market accessibility; Inter-island connectivity; Value chain analysis; Instrumental variable tobit regression.

JEL classification: C34, C36, O13, R41

> ¶ Corresponding author.
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3. Africa has untapped great potential for agriculture. Agriculture and agribusiness currently generate US$313 billion of commodities and products every year, which is projected to increase to US$1 trillion by 2030 (World Bank 2013). Significant potential remains to be developed. African farmers are normally disconnected from available technologies and market opportunities, and the current yields are far below potential levels (e.g., World Bank 2012).

4. The current paper aims at exploring the potential impacts of market accessibility on agricultural growth in the Comoros, with particular attention paid to different types of connectivity, i.e., within- and inter-island connectivity. The country comprises three major islands, Grande Comore, Anjouan and Moheli. While the country’s primary market, Moroni, is located in Grande Comore, the other two islands are more fertile. Land transportation within each island is already a challenge, but inter-island connectivity is even more difficult. The hypothesis tested by the paper is that the country could feed itself more by better connecting the agricultural production and consumption areas.

5. The rest of the paper is organized as follows: Section II provides an overview of the Comoros, with particular focus on transport connectivity. Section III discusses our empirical strategy and data. Section IV presents our main results and policy implications. Then, Section V concludes.

# **II. OVERVIEW OF THE COMOROS**

6. The Comoros is an island country in the Indian Ocean. The total population is about 830,000. The country comprises three main islands: Grande Comore, Anjouan and Moheli, of which the regional populations are about 430,000, 350,000 and 50,000, respectively. The largest city, Moroni, which is the national capital, is located at the western coast of Grande Comore. The other two islands have the regional capitals, Mutsamudu and Fomboni, respectively.
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economic gains can be achieved through the domestic markets in the Comoros. Improving connectivity is also expected to contribute to deepening the economic integration among the three regions.

# **III. EMPIRICAL STRATEGY AND DATA**

11. Basic economic theory tells that lowered transport costs can increase agricultural production ( **Figure 10** ). With a positive transport cost, T� �P� �C�, the equilibrium price is currently high at _P_ 0 with a limited amount of supply, _Q_ 0. Suppose that the transportation cost is reduced to T� �P� �C�. Then, the supply curve shifts downwards. In a new equilibrium, the market price declines to _P_ 1 and the supply or production increases to _Q_ 1. Therefore, both consumer and producer surplus increase. That is, both groups can benefit from lowered transportation costs.

**Figure 10. Demand, supply and transport costs**

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12. To empirically estimate the impact of transport connectivity on agricultural production, a simple crop production function is considered: where _Qij_ is the amount of crop _j_ produced by household _i_ , using production inputs _Xij_ . Although our household data are not comprehensive in terms of input variables, _X_ , four types of inputs are included following the agricultural economics literature (e.g., GyimahBrempong, 1987; Bravo-Ortega and Lederman, 2004): labor, fertilizer, improved seeds, and intermediary services.

13. As usual, the production levels may also depend on household characteristics, _Zi_ , for example, the age of the head of household and ownership of certain assets, such as vehicles and motorcycles. The crop-specific fixed-effects, _cj_ , are also included to control for unobservables across different crops. _ε_ is an idiosyncratic error distributed independently and identically under the cluster-robust variance-covariance assumption.

14. The main hypothesis of the paper is that the level of production is affected by the market accessibility, _Mi_ . This contains a set of locational characteristics of household _i_ , which is common across crops. The impact of transport connectivity is supposed to be captured by _β2_ . This specification implicitly rules out subsistence farming with few advanced inputs used, which is in fact the case in the Comoros. As will be shown below, only 10 percent of the surveyed households used some advanced inputs in our sample. On the output side, on the other hand, about half were involved in some market transactions. In our model, the accessibility variable therefore captures the generic impact of access to input and output markets.<sup>2</sup>

> 2 The paper will also examine the market sales equation, in which the accessibility variable may be able to more explicitly capture the impact of access to output markets. See below.
- 9 -

15. Three connectivity variables are constructed using spatial software based on road user costs and maritime transport costs: The first is transport costs to bring goods to Moroni, denoted by _COSTMORONI_ . This measures the accessibility to the primary market. The second variable is transport costs to bring goods to a large city with a population of 7,500 or more ( _COSTCITY_ ). Major towns in each island are taken into account.<sup>3</sup> This is expected to represent the market accessibility at a more local level within each island.

16. Finally, the Market Access Index ( _MAI_ ) is computed as an integral measure of all kinds of market accessibility. Formally, it is often defined by the average market size inversely weighted by transport difficulties. The idea basically follows Tobler’s first law of geography: “everything is related to everything else, but near things are more related than distant things (Tobler 1970).” where _Ym_ represents the size of market at _m_ , which is measured by the population that does not engage in agricultural production.<sup>4</sup> _dim_ measures transportation costs between location _i_ and destination _m_ . The index is normalized to zero to one. It is clear that Moheli is particularly disconnected from the rest of the country, while Grande Comore, especially around Moroni, has relatively good market accessibility ( **Figure 11** ). Not surprisingly, poverty is highly correlated with the MAI: The poor tend to be less connected to the markets ( **Figure 12** ).

> 3 Twenty-one cities and towns were identified among a total of 302 populated areas: Adda Daoueni, Barakani, Bazimini, Dindri, Domoni, Fomboni, Iconi, Jimlime, Koni Djodjo, Mbeni, Mirontsi, Moroni, Moya, Mremani, Mutsamudu, Ngadzale, Ongodjou, Ouani, Ounkazi, Sima and Tsembehou.

> 4 It is estimated by the population multiplied by the share of non-agricultural households, which is calculated by subregion, using the same household survey.
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other African countries. Thus, the dependent variable, which is the quantity of crops sold, _Sij_ , is censored: Since _M_ is potentially endogenous, the instrumental variable tobit (IVTOBIT) model is used to estimate the equation. Unlike Equation (1), this specification allows to measure the impact of output market connectivity because the dependent variable is a precise measurement representing output market participation, explicitly ruling out subsistence production.

20. Similarly, an alternative specification is this: where _SHRij_ is the share of market sales of crop _j_ for household _i_ . This can be estimated consistently by the instrumental variable (IV) regression.

21. The current paper relies on a household expenditure and consumption survey that was carried by the Comorian National Institute of Statistics and Economic and Demographic Studies (INSEED) in 2014. The survey has an agricultural module, in which households were asked how many crops were produced in monetary terms. In total, 36 crops were identified. For each crop, households were also asked whether they used fertilizer and improved seeds. The availability of intermediary services to sell produce was also interviewed. Three types of services were itemized: (i) Aggregation at the cooperative level (denoted by _COOP_ ), (ii) Direct access to large markets ( _MKT_ ), and (iii) Collection of crops by intermediate traders, i.e., collectors ( _TRAD_ ). Note that these data are available at the crop level. In addition, households were asked whether they sold some of their produce, and how much.
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24. Agricultural producers are quite heterogenous. The amount of crops produced ranges from 2 kg to over 50 tons, with an average of 280 kg. The market sales are also different, from 2 kg to 9,100 kg. Labor force is measured by the number of household members aged 16 to 60. The use of advanced inputs, such as fertilizer and improved seeds, remains minimal in the Comoros. Only 12 and 11 percent of households used them, respectively. Intermediary services by cooperatives or traders also seem to be unavailable in most places. It is also noteworthy that farmers often do not have any transport means in the Comoros.

# **<u>Table 1. Summary statistics</u>**

|<br>Variable|Abb.|Obs|Mean|Std. Dev.|Min|Max|
|---|---|---|---|---|---|---|
|Quantity of crop produced (kg)|_Q_|2,587|280.26|1104.56|<br>1.98|51613|
|Volume of crop sold (kg)|_S_|1,340|225.11|419.88|<br>2.30|9133|
|Transport costs to bring produce to Moroni<br>|_COSTMORONI _|2,587|55.43|42.88|<br>0.08|100.54|
|(US$/ton)|||||||
|Transport costs to bring produce to a large city|_COSTCITY_|2,587|0.89|0.83|<br>0.03|2.89|
|(US$/ton)|||||||
|Market Access Index (0 to 1)|_MAI_|2,587|0.60|0.27|<br>0.08|1.00|
|Labor force (age 16 to 60)|_L_|2,587|2.63|1.32|<br>1|10|
|Use of improved seeds|_SEED_|2,587|0.12|0.32|<br>0|1|
|Use of fertilizer|_FERT_|2,587|0.11|0.32|<br>0|1|
|Access to intermediary services:|||||||
|Crop collection by cooperatives|_COOP_|2,587|0.02|0.14|<br>0|1|
|Direct access to large market|_MKT_|2,587|0.16|0.37|<br>0|1|
|Crop collection by intermediate traders|_TRAD_|2,587|0.01|0.10|<br>0|1|
|Household size|_SIZE_|2,587|5.41|2.37|<br>1|15|
|Dummy variable for male household head|_MALE_|2,587|0.80|0.40|<br>0|1|
|Age of household head|_AGE_|2,587|45.93|13.82|<br>16|90|
|Ownership of transport means:|||||||
|Vehicle|_CAR_|2,587|0.06|0.24|<br>0|1|
|Motorcycle|_MOTR_|2,587|0.04|0.20|<br>0|1|
|Bicycle|_BICY_|2,587|0.01|0.09|<br>0|1|
|Instrumental variables:|||||||
|Slope (degree)||2,587|6.48|3.69|<br>0.17|16.70|
|Elevation (meter)||2,587|305.83|246.00|<br>2.00|881.00|
|Longitude (degree)||2,587|<br>43.92|0.51|<br>43.23|44.53|
|Latitude(degree)||2,587|<br>-12.05|0.31|<br>-12.38|-11.37|
- 14 -

# **IV. ESTIMATION RESULTS**

25. First, OLS regression was performed. The results are broadly consistent with prior expectation ( **Table 2** ). The transport cost variables have negative coefficients, and _MAI_ has a positive coefficient. Thus, improved transport connectivity to markets would likely enhance crop production in the Comoros. As discussed, however, the results may be biased because of the potential endogeneity associated with transport investments.

26. To deal with this problem, the instrumental variable (IV) estimator was used. The results are shown in **Table 3** and found to be broadly consistent with the above: Improved market accessibility increased crop production. The endogeneity test results are mixed: Two variables, _COSTCITY_ , and _MAI_ , seem to be able to be treated exogenously. In the first and the last column models, the exogeneity hypothesis can be rejected with test statistics of 23.8 and 28.8, respectively. The overidentifying restriction test statistics are estimated at 3.81 and 2.68. Thus, our instruments are considered to be valid in these cases.

27. The table indicates that crop production was increased by improving the market accessibility in general. Particularly, the accessibility to Moroni is essential. When all accessibility variables are included, the coefficient of _COSTMORONI_ is only found to be significantly positive. The impact of _MAI_ , which also essentially measures the proximity to Moroni, may be captured by the coefficient of _COSTMORONI_ . Policy implications are clear: The access to the primary market is critical to stimulate agricultural production in the Comoros.

28. With respect to other variables, the measured productivity impacts of labor force, improved seeds or fertilizer are inconclusive. All the coefficients are statistically insignificant. It was found that access to intermediary services is important. The coefficient of _COOP_ is always positive: Cooperatives play an important role to collect and consolidate crops that are produced. _MKT_ also has a significantly positive coefficient. It means that farmers produced more when they had good and direct access to a large market.
- 15 -

**<u>Table 2. OLS estimation results for crop production</u>**

||ln_Q_||ln_Q_|ln_Q_|ln_Q_||
|---|---|---|---|---|---|---|
|ln_COSTMORONI_|-0.209|(0.136)|||-0.0003|(0.147)|
|ln_COSTCITY_|||-0.126 (0.036) ***||-0.079|(0.037) **|
|ln_MAI_||||1.240 (0.287) ***|0.941|(0.316) ***|
|ln_L_|0.077|(0.069)|0.055 (0.068)|0.067 (0.067)|0.053|(0.067)|
|_SEED_|0.077|(0.084)|0.070 (0.081)|0.059 (0.083)|0.057|(0.082)|
|_FERT_|0.034|(0.095)|0.018 (0.097)|0.029 (0.097)|0.014|(0.094)|
|_COOP_|0.540|(0.200) ***|0.561 (0.185) ***|0.527 (0.193) ***|0.548|(0.185) ***|
|_MKT_|0.434|(0.068) ***|0.421 (0.068) ***|0.439 (0.068) ***|0.431|(0.068) ***|
|_TRAD_|0.091|(0.239)|0.104 (0.242)|0.116 (0.249)|0.110|(0.253)|
|_MALE_|0.050|(0.063)|0.023 (0.064)|0.025 (0.061)|0.015|(0.062)|
|_SIZE_|-0.063|(0.068)|<sup>-0.057 (0.068)</sup>|<sup>-0.059 (0.068)</sup>|-0.051|(0.067)|
|_AGE_|0.023|(0.081)|0.010 (0.078)|0.006 (0.080)|0.003|(0.078)|
|_CAR_|-0.242|(0.109) **|-0.249 (0.111) **|-0.230 (0.112) **|-0.242|(0.113) **|
|_MOTR_|-0.170|(0.158)|<sup>-0.178 (0.162)</sup>|<sup>-0.186 (0.166)</sup>|-0.184|(0.166)|
|_BICY_|0.244|(0.340)|0.279 (0.332)|0.158 (0.332)|0.200|(0.329)|
|Constant|5.497|(0.400)***|5.586 (0.382)***|5.889 (0.388)***|5.788|(0.399)***|
|Obs.|2587||2587|2587|2587||
|R-squared|0.365||0.371|0.373|0.3748||
|F-stat|22.79||23.25|24.03|23.14||
|Dummy variab|les:||||0.3777||
|Crops|Yes||Yes|Yes|Yes||
|Prefectures|Yes||Yes|Yes|Yes||

**<u>Table 3. IV estimation results for crop production</u>**

||ln_Q_||ln_Q_||ln_Q_||ln_Q_||
|---|---|---|---|---|---|---|---|---|
|ln_COSTMORONI_|-0.854|(0.226) ***|||||-1.046|(0.307) ***|
|ln_COSTCITY_|||-0.209|(0.100) **|||0.057|(0.135)|
|ln_MAI_|||||2.931|(1.271) **|-1.240|(1.708)|
|ln_L_|0.064|(0.068)|0.050|(0.069)|0.048|(0.066)|0.085|(0.077)|
|_SEED_|0.024|(0.084)|0.034|(0.082)|-0.002|(0.084)|0.049|(0.090)|
|_FERT_|<br>-0.014|<br>(0.095)|<br>-0.040|<br>(0.096)|<br>-0.048|<br>(0.097)|<br>0.012|<br>(0.104)|
|_COOP_|0.564|(0.203) ***|0.568|(0.181) ***|0.478|(0.192) **|0.559|(0.220) **|
|_MKT_|0.437|(0.066) ***|0.432|(0.068) ***|0.431|(0.068) ***|0.440|(0.067) ***|
|_TRAD_|0.011|(0.262)|0.103|(0.246)|0.114|(0.271)|-0.006|(0.254)|
|_MALE_|0.062|(0.062)|0.017|(0.069)|0.007|(0.065)|0.100|(0.080)|
|_SIZE_|-0.039|(0.068)|-0.041|(0.068)|-0.031|(0.068)|-0.051|(0.073)|
|_AGE_|<br>0.055|<br>(0.080)|<br>0.033|<br>(0.078)|<br>0.018|<br>(0.081)|<br>0.065|<br>(0.089)|
|_CAR_|<br>-0.313|<br>(0.120) ***|<br>-0.251|<br>(0.114) **|<br>-0.278|<br>(0.119) **|<br>-0.308|<br>(0.119) ***|
|_MOTR_|-0.137|(0.155)|-0.163|(0.164)|-0.168|(0.181)|-0.126|(0.152)|
- 16 -

|_BICY_|0.235 (0.333)|0.304 (0.325)|0.072 (0.337)|0.318|(0.377)|
|---|---|---|---|---|---|
|Constant|5.007(0.412)***|5.497(0.373)***|6.202(0.458)***|4.707|(0.587)***|
|Obs.|2587|2587|2587|2587||
|R-squared|0.347|0.364|0.351|0.317||
|Wald chi2|1490.0|1490.0|1471.9|1408.8||
|Dummy variab|les:|||||
|Crops|Yes|Yes|Yes|Yes||
|Prefectures|Yes|Yes|Yes|Yes||
|Endogeneity te|st:|||||
|C stat. chi2|23.808 ***|1.219|1.968|28.808|***|
|Overidentifyin|g restriction test:|||||
|Hansen's J|3.817|20.235 ***|19.150 ***|2.689||
|stat. chi2||||||

29. To estimate the market sales equation, the IVTOBIT model was applied: The results are presented in **Table 4** . The market accessibility variables to Moroni and a regional city are again found to be significant. The coefficient is estimated at -1.95 when _COSTMORONI_ is only included in the equation. The coefficient is also significant at -0.95 when _COSTCITY_ is used. Thus, the crop sales have a higher elasticity with respect to the costs to Moroni. The statistical significance looks relatively weak when _MAI_ is used.

30. When all three variables are included, the accessibility to Moroni remained statistically significant. In this model, the endogeneity test statistic is estimated at 20.09, which implies that the connectivity variables are likely endogenous. Thus, the result can be interpreted to mean that the connectivity to Moroni is particularly important to support agricultural market transactions. The finding may not be surprising because Moroni is the primary market in the Comoros. All the indications are that improved market accessibility can boost agricultural growth. Especially given the current distribution of population (see **Figure 11** ) and agricultural production areas ( **Figure 14** ), inter-island connectivity is an important challenge to the country.

31. The results also suggest that the accessibility to intermediary services, such as cooperatives and collectors, are instrumental to facilitating the farmers’ market participation to sell their produce. All the coefficients of _COOP_ , _MKT_ and _TRAD_ are estimated to be
- 17 -

significantly positive. This looks consistent with the fact that the vast majority of farmers do not own their own transport means. The result indicates that not only transport infrastructure but also transport and trade services are important. Interestingly, the size of household also has a positive impact on the market participation. The coefficient of _SIZE_ is always positive and significant. It may be interpreted to mean that the market participation is timeconsuming, requiring extra labor force, for example, to bring their produce to the markets or the places where their produce is consolidated.

32. Since the exogeneity hypothesis cannot be rejected in the two cases, the tobit regression was also performed ( **Table 5** ). The results just confirm the above findings. The accessibility to the large city in the islands has a negative and significant coefficient.

**<u>Table 4. IVTOBIT estimation results for market sales</u>**

|ln_S_|ln_S_|ln_S_||ln_S_|
|---|---|---|---|---|
|ln_COSTMORONI_-1.950 (0.804) **||||-2.022 (1.062) *|
|ln_COSTCITY_|-0.952 (0.342) ***|||-0.623 (0.437)|
|ln_MAI_||2.501|(7.588)|-9.701 (5.997)|
|ln_L_<br>-0.286 (0.243)|-0.444 (0.249) *|-0.254|(0.255)|-0.314 (0.285)|
|_SEED_<br>-0.127 (0.263)|-0.148 (0.243)|<sup>-0.102</sup>|<sup>(0.288)</sup>|0.001 (0.283)|
|_FERT_<br>0.035 (0.319)|-0.031 (0.294)|0.160|(0.313)|0.039 (0.321)|
|_COOP_<br>3.515 (0.396) ***|3.651 (0.418) ***|3.397|(0.375) ***|3.693 (0.406) ***|
|_MKT_<br>3.582 (0.203) ***|3.485 (0.203) ***|3.587|(0.199) ***|3.471 (0.204) ***|
|_TRAD_<br>3.542 (0.400) ***|3.679 (0.356) ***|3.757|(0.348) ***|3.450 (0.463) ***|
|_MALE_<br>-0.069 (0.229)|-0.271 (0.237)|<sup>-0.147</sup>|<sup>(0.258)</sup>|-0.003 (0.305)|
|_SIZE_<br>0.599 (0.232) **|0.623 (0.241) ***|0.514|(0.243) **|0.577 (0.241) **|
|_AGE_<br>0.374 (0.295)|0.277 (0.292)|0.321|(0.296)|0.436 (0.318)|
|_CAR_<br>-0.930 (0.426) **|-0.958 (0.451) **|-0.807|(0.416) *|-1.013 (0.418) **|
|_MOTR_<br>0.289 (0.551)|0.203 (0.554)|0.193|(0.561)|0.354 (0.560)|
|_BICY_<br>-0.949 (0.816)|-0.631 (0.935)|<sup>-1.067</sup>|<sup>(0.941)</sup>|-0.092 (1.024)|
|Constant<br>0.664 (1.343)|1.597 (1.255)|2.597|(1.841)|-1.563 (2.057)|
|Obs.<br>2587|2587|2587||2587|
|Obs.<br>1247|1,265|1,265||1,265|
|Censored|||||
|Wald chi2<br>1174.4|1195.0|1192.7||1108.7|
|Dummy variables:|||||
|Crops<br>Yes|Yes|Yes||Yes|
|Prefectures Yes|Yes|Yes||Yes|
|Endogeneity test:|||||
|Wald chi2<br>11.90 ***|4.66|0.06||20.09 ***|
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**<u>Table 5. TOBIT estimation results for market sales</u>**

||ln_S_||ln_S_||
|---|---|---|---|---|
|ln_COSTCITY_|-0.283|(0.129) **|||
|ln_MAI_|||0.660|(0.988)|
|ln_L_|-0.292|(0.237)|<sup>-0.231</sup>|(0.239)|
|_SEED_|-0.078|(0.246)|<sup>-0.065</sup>|(0.252)|
|_FERT_|0.133|(0.283)|0.192|(0.285)|
|_COOP_|3.471|(0.371) ***|3.399|(0.379) ***|
|_MKT_|3.545|(0.194) ***|3.578|(0.194) ***|
|_TRAD_|3.727|(0.352) ***|3.750|(0.362) ***|
|_MALE_|-0.149|(0.223)|<sup>-0.115</sup>|(0.225)|
|_SIZE_|0.526|(0.223) **|0.492|(0.223) **|
|_AGE_|0.330|(0.285)|0.340|(0.288)|
|_CAR_|-0.845|(0.417) **|-0.805|(0.410) **|
|_MOTR_|0.209|(0.545)|0.206|(0.546)|
|_BICY_|-0.810|(0.857)|<sup>-0.932</sup>|(0.822)|
|Constant|1.964|(1.215)|2.251|(1.240)*|
|Obs.|2587||2587||
|Obs. Censored|1247||1247||
|F stat|18.57||18.44||
|Dummy variabl|es:||||
|Crops|Yes||Yes||
|Prefectures|Yes||Yes||

33. The IV regression on market sales shares shows similar results ( **Table 6** ). Transport connectivity to cities is important. Of particular note, the coefficients of _COSTCITY_ and _MAI_ are statistically significant in this case. Market accessibility is no doubt essential to promote farmers’ output market participation. In addition, it is confirmed once again that not only transport infrastructure but also transport and trade services are equally important: _COOP_ , _MKT_ and _TRAD_ systematically have positive and significant coefficients. Other household characteristics do not seem to play an important role in determining households’ decision to be involved in market transactions, which is also broadly consistent with the above.
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**<u>Table 6. IV regression results for market sales share</u>**

||<br>_SHR_||<br>_SHR_||_SHR_||_SHR_||
|---|---|---|---|---|---|---|---|---|
|ln_COSTMORONI_|-0.531|(0.400)|||||-0.778|(1.955)|
|ln_COSTCITY_|||-0.374|(0.211) *|||-0.378|(0.292)|
|ln_MAI_|||||2.089|(1.285) *|-1.654|(6.953)|
|ln_L_|0.242|(0.159)|0.322|(0.181) *|0.138|(0.112)|0.504|(0.556)|
|_SEED_|0.507|(0.247) **|0.720|(0.312) **|0.381|(0.178) **|0.978|(0.814)|
|_FERT_|0.262|(0.159) *|0.283|(0.186)|0.257|(0.149) *|0.310|(0.241)|
|_COOP_|0.367|(0.134) ***|0.421|(0.155) ***|0.340|(0.117) ***|0.447|(0.207)|
|_MKT_|0.973|(0.238) ***|1.114|(0.265) ***|0.901|(0.188) ***|1.311|(0.586)|
|_TRAD_|1.127|(0.726)|0.869|(0.764)|1.128|(0.686) ***|0.750|(0.942)|
|_MALE_|-0.252|(0.183)|-0.510|(0.269) *|-0.207|(0.143)|-0.671|(0.540)|
|_SIZE_|0.102|(0.092)|0.167|(0.119)|0.086|(0.078)|0.229|(0.204)|
|_AGE_|-0.182|(0.198)|-0.475|(0.303)|<sup>-0.105</sup>|<sup>(0.138)</sup>|-0.682|(0.680)|
|_CAR_|-0.054|(0.136)|-0.158|(0.163)|<sup>-0.017</sup>|<sup>(0.109)</sup>|-0.237|(0.322)|
|_MOTR_|-0.010|(0.085)|-0.034|(0.120)|<sup>-0.022</sup>|<sup>(0.089)</sup>|-0.024|(0.154)|
|_BICY_|-0.454|(0.238) *|-0.363|(0.337)|<sup>-0.590</sup>|<sup>(0.233) **</sup>|-0.254|(0.635)|
|Constant|0.779|(0.587)|1.929|(1.003)*|1.145|(0.628)*|1.933|(1.186)|
|Obs.|2587||2587||2587||2587||
|R-squared|0.040||0.048||0.032||0.050||
|Wald chi2|298.1||131.2||241.7||108.9||
|Dummy variables:|||||||||
|Crops|Yes||Yes||Yes||Yes||
|Prefectures|Yes||Yes||Yes||Yes||
|Endogeneity test:|||||||||
|C stat. chi2|1.454||3.6056|**|1.353||3.948||
|Overidentifying restric|tion test:||||||||
|Hansen's J stat. chi2|2.637||0.3487||1.790||0.000||

# **V. CONCLUSION**

34. Agriculture is an important sector in Africa. However, the region’s production system remains small-scale subsistence farming with few advanced inputs used with little produce sold in the market. The paper revisited the traditional transport-agricultural growth nexus. Even if the existing literature is substantially rich, this is still an important question, particularly for small island developing states, such as the Comoros, where the domestic markets are limited, and the transport and transaction costs are often prohibitively high.
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35. Using household survey data in the Comoros, the paper examined the potential impacts of transport connectivity on crop production and market sales. Different types of connectivity, i.e., within- and inter-island connectivity, were considered. By the value chain analysis, first, it was found that in the country, there are significant price differentials among the islands, indicating disconnection among the regional economies in the country. In addition, the differences were found to be attributed largely to high inland and maritime transport costs.

36. More formally, second, regression analysis was carried out. The results indicate that significant untapped economic potential exists in the domestic market. The accessibility to Moroni, the primary market in the country, was found to be of particular importance, indicating the importance of inter-island connectivity among the islands. The crop production can be increased by reducing the transport costs to Moroni or improving the market accessibility in general. The connectivity to Moroni is also essential to encourage farmers to participate in market transactions, stimulating agricultural market sales.

37. The estimation results also show that not only transport infrastructure but also transport and trade services are important. The accessibility to intermediary services, such as cooperatives and collectors, plays an important role to increase crop production and market sales. Thus, it is important to not only invest in transport infrastructure but also promote private sector development in the transport and/or agrobusiness industries.