Agriculture and small towns in Africa

Africa is urbanizing rapidly. Yet most dual economy models focus on the sectoral rather than spatial dimensions of development. This article adopts a “dual–dual” approach to measuring rural/urban and farm/nonfarm linkages. We develop an economy‐wide model of Ethiopia that distinguishes between cities, towns, and rural areas. The model captures detailed sectoral and regional linkages, internal migration flows, and externalities from urban agglomeration. We find larger linkages between agricultural production and small towns and show that redirecting urban growth toward towns rather than cities leads to broader‐based economic growth and poverty reduction. In contrast, industry and services, particularly within cities, are far less effective in reaching rural areas and the poor. Africa's current urbanization pattern—toward major cities rather than towns—will weaken national growth–poverty linkages. Urbanization that takes advantage of the synergistic relationship between agriculture and small towns has the potential to result in a more inclusive growth trajectory.     

Tax Incidence in Madagascar: An Analysis Using Household Data

This article discusses tax incidence in Madagascar and askswho pays the taxes that finance government spending. Its mainconcern is to identify the progressivity of different taxeslevied in Madagascar, based on the consumption and income patternsfound in the 1994 Enquête Permanente auprès desMénages, a nationally representative survey. The resultssuggest that most taxes are progressive, meaning that wealthyhouseholds pay proportionately more of these taxes relativeto their expenditures than do poor households. Two notable exceptionsare taxes on kerosene and export duties on vanilla, both ofwhich are regressive. These results are consistent with thoseof a study of Ghana, the only other comparable research on taxincidence in Africa. That study found taxes on kerosene andcocoa exports to be the most regressive taxes in Ghana. Making firm policy recommendations for tax reform would requirean analysis of the economic efficiency and administrative efficacyof different taxes to complement this article's work on theirequity implications. Nevertheless, the results suggest thatthe movement away from trade taxes, especially export duties,and toward broadly based value added or income taxes would bemore equitable and more economically efficient. The only legitimateimpediment to such reforms in Madagascar is administrative,that is, the government's ability to collect different taxeseffectively. Although administrative efficiency may be a problemfor value added or income taxes, taxes on petroleum products(except kerosene) are highly progressive and provide a goodtax handle.     

Wheat markets,food aid and food security in Afghanistan

In Afghanistan, after two decades of civil strife and successive droughts from 1998 to 2002, large inflows of food aid, distributed mainly to returning refugees and through food for work programs, have helped offset production shortfalls of wheat, the country’s major staple. At the same time, private international trade from neighboring countries, especially Pakistan, has also played a major role in augmenting wheat supply and stabilizing prices.     

Road connectivity,population, and crop production in Sub‐Saharan Africa

This study adopts a cross‐sectional spatial approach to examine the relationship between transport infrastructure, population location, and agricultural production in Sub‐Saharan Africa using new data obtained from geographic information systems (GIS). We find that both population and agricultural production are spatially concentrated near large cities, with 41.4% of population and 23.6% of agricultural production (in value terms) within 2.5 hours travel time to large cities. Taking into account agroecological and other factors, we find a statistically significant association between travel time and agricultural production. Using coefficients estimated for Mozambique, we simulate the effects of hypothetical increases in road investments on travel times and agricultural production, suggesting that improvements in road infrastructure could facilitate a substantial increase in agricultural production.     

Agriculture-led growth: foodgrains versus export crops in Madagascar

This article compares the growth-generating power of alternative agricultural development strategies in Madagascar. Projections from a semi-input–output model and a recently developed social accounting matrix suggest that both paddy and export crops stimulate strong linkages with other sectors of the Malagasy economy. But since paddy output can be increased at lower cost, investment in rehabilitating small irrigated rice perimeters generates 40% to 100% more gdp than a comparable investment in coffee production. Paddy also generates greater employment and a more equitable income distribution.     

Enhancing food security in South Sudan: the role of markets and regional trade

South Sudan faces serious problems of food insecurity due to low levels of domestic food production, periodic droughts, widespread poverty, and since late 2013, renewed armed conflict. This article explores market price behavior using cointegration analysis and estimates the effects of production and trade shocks through multimarket model simulations. We show that market prices in the capital city, Juba, of both maize and sorghum are cointegrated with import parity prices of these cereals sourced from Uganda, consistent with observed trade flows. Model simulations, using econometrically estimated demand parameters, suggest that private sector imports of maize and wheat would greatly mitigate the potential fall in consumption in the case of a decline in domestic cereal production. Other simulations indicate that if total imports of cereals are reduced by one‐third (still more than two times the levels of food aid in 2013) because of disruptions to private market flows, domestic prices of cereals could rise by 45% or more. The article concludes that whatever measures are taken involving national food security reserves, it is crucial that government policy serves to maintain incentives for private sector imports to avoid destabilizing market supplies, domestic prices, and ultimately, food consumption of the poor.     

Shifting sands: The changing case for monetizing project food aid in Bangladesh

Monetization involves local sale of food aid commodities and using the cash to finance other programs. To explore the likely consequences of monetization, this paper combines a stockpile of recent microeconomic evidence from food and cash-for-work projects in Bangladesh together with a multimarket simulation model. Results suggest that a switch from food-for-work's (FFW) in-kind deliveries of wheat to an identical wheat-financed cash-for-work (CFW) program would unambiguously improve welfare of the poor.     

Growth Linkages, Price Effects and Income Distribution in Sub-Saharan Africa

This paper measures economic linkages emanating from investment-ledgrowth in eight different African countries with widely varyingeconomic structures. To explore the importance of price effectsin estimating these linkages, the paper employs two differentmethodologies for measuring the linkages, a fixed-price semi-input–output(SIO) model as well as a fully price-endogenous computable generalequilibrium model (CGE). Regardless of the methodology used,indirect effects prove to be large. On average — acrosscountries and sectors — inclusion of growth linkages nearlydoubles estimated national income growth following an initialinvestment-led shock. Sectorally, investments in agriculturegenerate the largest impact on the poor.     

Evaluating Alternative Policy Responses to Higher World Food Prices: The Case of Increasing Rice Prices in Madagascar

Higher world food prices have led many developing countries to adopt policies to mitigate the impact on low-income households. This article sets out a partial equilibrium framework to evaluate the efficiency, distributional, and revenue implications of alternative policy responses. The model is applied to evaluate tariff reductions and targeted transfers in Madagascar. Although lowering tariffs generates substantial efficiency gains, these accrue mainly to the top half of the welfare distribution, and poor net sellers are actually worse off. Developing a system of targeted direct transfers to poor households is likely to be a substantially more cost-effective approach to poverty alleviation.