What comes first,agricultural growth or democracy?

Today, the international community faces two major development challenges: how to ignite growth and how to establish democracy. Economic research has identified two plausible hypotheses regarding this association. The first hypothesis emphasizes the need to start with democracy and institutions that secure property rights. The second hypothesis emphasizes the need to start with physical and human capital accumulation. In this article, we discuss some of the econometric evidence on the relationship between institutions, human capital, and agricultural productivity growth across developed and developing countries with the objective of finding support for one or the other hypothesis. We find that most variables used in the literature to capture the effect of institutions are not independent of the process of growth. While no evidence of causation from political institutions to agricultural productivity growth is found, human capital accumulation emerges as an important source of growth.     

Conditioning trends shaping the agricultural and rural landscape in Africa

African countries continue to face deepening food crises that have been accentuated by the global food, energy, and financial crises. This situation is part of a long‐term structural problem: decades of under‐investments in agricultural sector and poor policies of support for smallholder farmers who form the bulk of the farming population. The inability of these farmers to achieve a supply response when commodity prices were high and market access was less of a problem suggests that there are multiple sets of binding constraints that continue to limit the potential of agricultural growth to reduce food security and poverty on the continent. This article reviews some of the historical trends that have hampered the performance of the agriculture sector. In addition, it reviews the impacts of more positive trends that could stimulate agricultural growth in Africa that could change the African agricultural landscape. The article however warns that there are more recent global developments and some continental challenges that could prevent or slow agricultural growth. These include the global financial crisis, public sector investments, inequities in global agricultural development policies, rush for agricultural lands by foreign investors, domestic commercial financing markets, climate change, and emerging carbon markets. The article argues that while opportunities for accelerated growth exists for African agriculture, new sets of policy instruments will be needed to support smallholder farmers to access new agricultural technologies, finance, reduce impacts of climate change, and adopt sustainable land use practices that can allow them to benefit from emerging global carbon markets.     

Economies of scale and market structure in international grain trade

A large body of literature has examined international grain trade in imperfectly competitive models. The article develops a two-stage duopoly model that considers a private trader and a State Trading Enterprise (STE) competing on a foreign market. The key difference between the private trader and the STE is their international organization; while the STE makes use of external agents to export, the private firm may choose to internalize international transactions. The game is solved for different modes of competition and under both assumptions of homogeneous and differentiated products, in order to assess how these assumptions affect the outcome of the game. The results of the game are examined by using numerical examples. The analysis shows that external shocks on export markets may result in a change of market structure and, consequently, of market shares. These effects depend on the initial market structure. Furthermore, the degree of product differentiation and the assumed mode of competition significantly affect the relative values of transaction and fixed costs at which the market structure changes.