Are resource-abundant economies disadvantaged?

Economies well endowed with natural resources relative to other factors of production have grown slower than other economies over the long term. In reviewing possible explanations for this, the article finds unconvincing such common suggestions as declining terms of trade and rising restrictions to primary product markets abroad. It suggests the most likely reason is these countries’ own distortionary policy regimes. Recent reforms in some resource-rich economies are already yielding growth dividends. The article also examines the impact of the greening of world preferences and politics on the prospects for resource-abundant economics.     

Trade liberalisation and regional integration: the search for large numbers

We surveyed the empirical literature using multi–country computable general equilibrium (CGE) models to analyse potential and actual regional trade agreements (RTAs). The studies indicate that these RTAs improve welfare, that trade creation greatly exceeds trade diversion, and that they are consistent with further global liberalisation. The welfare gains are bigger when models incorporate aspects of “new trade theory” such as increasing returns, imperfect competition, and links between trade liberalisation, total factor productivity growth, and capital accumulation. We also conjectured that an RTA expands market size and stability, allowing firms to pursue economies of fine specialisation, generating additional “Smithian” efficiency gains.     

Understanding the resource curse (or blessing) across national and regional scales: Theory,empirical challenges and an application

The relationship between resource extraction activity and economic growth has been widely studied in the literature, and the resource curse hypotheses emerged as a theory to explain the effects of resource windfalls on national economies. However, within countries, resource booms and busts can have distinctive effects across local economies, as extractive regions face particular economic consequences unlikely to be observed in nonresource regions. Empirically, most studies analysing the resource curse have relied on cross‐country models to estimate effects and inform policy; however, the use of regional – within‐country – analysis has gained attention from scholars lately, promoted by two advantages: it avoids unobserved country heterogeneities confounding economic outcomes caused by resources and exploits the subnational quasi‐natural experimental conditions generated by endowments. This paper contributes to the resource curse literature by discussing its theoretical causes across scale (regional vs. national effects) and highlighting the empirical challenges involved in the analysis of mining economic impacts across regions. We complement the discussions by econometrically modelling economic growth across nonmetropolitan substate regions of Australia during a period of resource windfalls, finding that in most cases, resources have been a blessing for local economies, although negative effects have also been experienced in parts of the country.     

The Impact of Industrial Market Access Negotiations on African Economies

This paper proposes an extensive data simulation exercise on the likely impact of non-agricultural market access liberalization. The paper analyses real options for tariff cut reduction, special and differential treatment and the treatment of unbound tariffs. This paper also gives indications concerning the likely economic impact of this trade round of industrial market access negotiations on African economies. It shows that an ambitious tariff cut reduction formula would provide greater access to developed country markets for African producers. However, this kind of formula has a major drawback for African countries in the sense that it could accelerate the de-industrialization of African countries and limit incentives to diversify their economies.     

African Agricultural Development: Lessons and Challenges

This paper reviews what has been learned from experiences of African agriculture and hence what policy lessons may be. Views of African agriculture over the last 130 years have changed from optimism to pessimism and at least halfway back again as the performance of the sector has fluctuated. Fortunately it seems the deep pessimism about agricultural prospects expressed in the 1980s and 1990s has receded. The performance of African agriculture since 1990 suggests that neither those who doubt that any significant advances are taking place, nor those who see advances in some remarkable but perhaps isolated cases of rapid transformation of farming and agricultural supply chains, have sufficient evidence – either from national data or small‐scale studies – to support their positions. Hence policy has to rely largely on general principles and historic lessons, rather than more clearly proven propositions. Policy debates over African agricultural development may sharply divide on some topics, but there is little debate over the importance of basic conditions for agricultural development of an enabling investment climate and the provision of rural public goods. Beyond these basics, the challenge is to remedy the failings of markets that deny most smallholders access to inputs, financial services and insurance. Here opinion divides between whether to return to public provision, as with fertiliser subsidies, or whether private and collective institutional innovations will be sufficient. Recent initiatives to test and scale up the latter look promising, but most have yet to be evaluated. If agricultural development is first and foremost about establishing the basic conditions for growth, then most countries in Africa may be better placed than they have been in the past. Given the many examples that show African smallholders investing and innovating when they have the chance, then there are reasons to hope that the modest growth of production and productivity seen in the last two decades may accelerate in the future – thereby allowing African countries to make the transition from agrarian to urban economies.     

Crisis Behind Closed Doors: Global Food Crisis and Local Hunger

The high and volatile food prices in 2007–8 triggered estimates of massive increases in poverty and hunger. However, hunger and volatile food prices have long been a feature of developing economies. This paper examines the impact of high global food prices on domestic terms‐of‐trade, food consumption and child undernutrition in the Central African Republic, Ethiopia, Liberia and Sierra Leone, comparing findings with the impacts of ‘seasonality’. As high international food prices permeated domestic markets, households in all the case study areas resorted to coping strategies common in the annual hunger season. Though acute malnutrition has not risen as consistently as in a seasonal hunger crisis, reduced micronutrient intake threatens to have severe long‐term consequences for health and poverty reduction. The similar impacts of seasonal and global food price rises on households provide an opportunity to design appropriate interventions to protect livelihoods.     

Contribution to a renewed framework for analysing the interactions between family and capitalist agriculture

We examine whether current assumptions concerning the declining resilience of family farming and the growing influence of capitalist forms of agricultural production are being confirmed in the cocoa sector of Cameroon and the coffee sector of Kenya. This study is based on surveys of 181 family and capitalist farmers. Our results indicate that the capitalist approach is being consolidated on former colonial coffee estates in Kenya and on the cocoa pioneer front in Cameroon. This study also shows that in areas with a long history of family farming, family forms are showing good resilience due to a diversification of activities and sources of income, especially nonagricultural ones, and the patrimonialization of the land. Finally, this study proposes a framework for analysing the interactions between family and capitalist agriculture and their respective multisectorial strategies. For family farming, these strategies are based on work force mobility, whereas for capitalist agriculture, they are based on financial capital mobility.     

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.     

Land use planning policies and market forces: Utopian aspirations thwarted?

This paper asks the question, to what extent do market forces limit planning policies? It delves into the constraining relationship of market forces on planning by reference to urban policies in the UK. In this context market forces are defined as dominant long term spatial economic trends which promote decentralisation. The essay uses policy case studies to develop its arguments. In general planning is shown to suffer from the lack of a systematic analysis of land use markets. Yet at its heart planning not only regulates/constrains the property market it also shapes and stimulates it. Planning is found to be most successful when it is shaping urban growth and decentralisation. It is a fundamentally different task to stem market flows and the probability of success is very different. Market forces do limit routes to Utopian aspirations but planners need the motivation, understanding and means to work with the market to produce desired outcomes.     

Why do global long‐term scenarios for agriculture differ? An overview of the AgMIP Global Economic Model Intercomparison

Recent studies assessing plausible futures for agricultural markets and global food security have had contradictory outcomes. To advance our understanding of the sources of the differences, 10 global economic models that produce long‐term scenarios were asked to compare a reference scenario with alternate socioeconomic, climate change, and bioenergy scenarios using a common set of key drivers. Several key conclusions emerge from this exercise: First, for a comparison of scenario results to be meaningful, a careful analysis of the interpretation of the relevant model variables is essential. For instance, the use of “real world commodity prices” differs widely across models, and comparing the prices without accounting for their different meanings can lead to misleading results. Second, results suggest that, once some key assumptions are harmonized, the variability in general trends across models declines but remains important. For example, given the common assumptions of the reference scenario, models show average annual rates of changes of real global producer prices for agricultural products on average ranging between ?0.4% and +0.7% between the 2005 base year and 2050. This compares to an average decline of real agricultural prices of 4% p.a. between the 1960s and the 2000s. Several other common trends are shown, for example, relating to key global growth areas for agricultural production and consumption. Third, differences in basic model parameters such as income and price elasticities, sometimes hidden in the way market behavior is modeled, result in significant differences in the details. Fourth, the analysis shows that agro‐economic modelers aiming to inform the agricultural and development policy debate require better data and analysis on both economic behavior and biophysical drivers. More interdisciplinary modeling efforts are required to cross‐fertilize analyses at different scales.     

The impact of commodity price shocks among regional economies of a developing country

Volatile commodity prices have become commonplace in the world economy. Although is widely accepted that commodity‐rich countries are affected by this phenomenon, information about how commodity price shocks impacts their regional economies is scarce. This work analyses how shocks in copper prices impact the economies of the major copper‐producing regions in a developing country, such as Chile. To achieve this goal, a two‐step method is implemented. First, we estimate long‐term copper prices using the Wets and Rios approach (2015) and these estimates are then contrasted with those forecast by the Chilean public advisory committee. Second, a general equilibrium model is implemented to simulate the effects of both expansive and restrictive copper price cycles within major producing regions in Chile. Our results show that the proposed approach yields more homogeneous price projections than those made by the Chilean Government, which, in turn, are very close to variations in response to negative shocks. The price simulations confirm that price cycles affect the savings of government and business, which directly dampens regional production, mainly via investment, capital mobilisation and diversification of production. Because of this, fiscal revenues generated by copper sales act as a trade cycle term multiplier in regional economies. Overall, within copper‐producing regions, we suggest implementing long‐term policies to improve profit distribution efficiency.     

Scaling service delivery in a failed state: cocoa smallholders,Farmer Field Schools,persistent bureaucrats and institutional work in Côte d’Ivoire

The increased use of sustainability standards in the international trade in cocoa challenges companies to find effective modes of service delivery to large numbers of small-scale farmers. A case study of the Sustainable Tree Crops Program targeting the small-scale cocoa producers in Côte d’Ivoire supplying international commodity markets shifts attention from mechanisms of private governance to the embedding of service delivery in the institutional dynamics of the state. It demonstrates that, despite a recent history of violent conflict and civil unrest, the introduced Farmer Field Schools programme achieved a surprising scale in terms of numbers and geographical spread. The analysis of this outcome combines political science and anthropological studies of effective and developmental elements in the state with the interest in institutional work found in organization science. The scaling of a new form of service delivery is explained by the skilful practices of institutional work by managers of a public–private partnership. They have been professionally associated with the sector for a long time and had the capacity to embed new forms of service delivery in persistent pockets of bureaucratic effectiveness in a failed state.     

Industrial upgrading and development in Lesotho’s apparel industry: global value chains,foreign direct investment,and market diversification

Many low-income countries are integrated into apparel global value chains through foreign direct investment (FDI), including Lesotho, which has become the largest Sub-Saharan African apparel exporter to the US under the African Growth and Opportunity Act. More recently, South Africa has emerged as a new apparel export market in Lesotho. The two markets are supplied by different types of FDI firms – affiliates of Taiwanese transnational producers and South African manufacturers – which are part of different value chain variants. The paper assesses the implications for industrial upgrading and development of integration into these two value chain variants in Lesotho, drawing on firm-level and institutional interviews. We show that their different characteristics in terms of investors’ motivation, governance structure, end markets, firm set up and most importantly and causally, ownership and embeddedness have crucial impacts on functional, product and process upgrading, local linkages, and skill development.     

Sustainability winners and losers in business-biased cocoa sustainability programmes in West Africa

In cocoa farming forestland is a production factor. Cocoa planting is easiest and production costs are lowest in tropical forest. Historically, therefore, once forestland has been exhausted in a given geographical area planters tend to diversify into other production systems to avoid the poverty (induced by increasing factor cost) of post-forest cultivation. In modern times however cocoa planters exist in a value chain and post-forest diversification could threaten multinational companies relying on rural planters for their raw material. In 2014 ten of the world’s largest chocolate multinationals combined, with more than $500 million in funding, to introduce a cocoa sustainability scheme called CocoaAction. In principle, CocoaAction and similar sustainability schemes sponsored by western multinational chocolate companies are interventions to empower cocoa planters and planting communities in West African countries. But in practice, as this article will show, these schemes are a response to diminishing returns in cocoa-producing communities and the prospect of diversification, and the resulting projection of a shortage in raw material. There are signs that diversification away from cocoa will be beneficial to cocoa planters and their communities. Cocoa sustainability schemes are therefore designed for the benefit of multinational chocolate companies and at the expense of diversification in West African countries.     

Parametric and Semiparametric Modeling of the Off-Farm Labor Supply of Agrarian Households in Transition Bulgaria

The reaction of labor markets to economic reforms is an important indicator of the progress of transition. Because of diminished government support and the breakup of state and collective enterprises, labor market adjustments in the transition economies have been particularly severe in the agricultural sector. This article evaluates the off-farm labor market for a sample of agrarian households in transition Bulgaria. We give particular attention to the distributional assumptions that underlie standard approaches to the evaluation of labor supply. A variety of specification tests are considered and support for standard maximum likelihood estimates which rely on normality as a maintained hypothesis is mixed. Alternative semiparametric (distribution-free) estimators are also considered. The empirical results indicate that, five years after the initiation of the transition, off-farm labor supply patterns for Bulgarian agricultural households are similar to what is commonly observed in developed market economies. Labor supply is positively affected by factors such as education and work experience which are hypothesized to increase off-farm wages. Social benefit programs providing monetary or in-kind support payments are shown to significantly decrease off-farm work.     

Economic analysis of different options in integrated pest and soil fertility management in maize systems of Western Kenya

The major biotic constraints to the production of maize, the major staple food in Western Kenya, are field pests such as Striga and stem borers, and low soil fertility. To counter these constraints, new cropping systems have been developed, including “push‐pull,” rotations with promiscuous soybean varieties and green manure crops, and imidazolinone resistant‐ (IR‐) maize. To analyze the technical and economic performance of these technologies, both with and without fertilizer, on‐farm researcher‐managed long‐term trials were implemented over six seasons in two sites each in Vihiga and Siaya districts of Western Kenya. The economic results, based on marginal analysis using a multioutput, multiperiod model, show that the new cropping systems with fodder intercropping (push‐pull) or soybean rotations were highly profitable. Push‐pull is more profitable but requires a relatively high initial investment cost. Green manure rotation, IR‐maize, and fertilizer all increased yields, but these investments were generally not justified by their increased revenue. We argue that research on rotation and cropping systems to tackle pest and soil fertility problems in Africa deserve more attention. This will require increased collaboration between agronomists and economists to set up long‐term experiments with new cropping systems to develop proper economic models.     

Does Conservation Agriculture Change Labour Requirements? Evidence of Sustainable Intensification in Sub-Saharan Africa

Population growth, increasing wealth and changing diets require agriculture in Sub-Saharan Africa to intensify to meet future food demand and ensure food security in the region. Conservation agriculture can increase yields in the long run and reduce the negative environmental impacts of intensive farming. In changing the mix of resources used and how they are managed, the adoption of conservation agriculture can have a direct impact on farm labour. We study the relationship between conservation agriculture and labour input requirements as observed in five Sub-Saharan African countries. We focus on the amount of work required and the source of the work employed (household or hired, by gender, by children and by production stage). We apply multinomial endogenous switching regression models on a panel of household and farm data from Ethiopia, Kenya, Malawi, Mozambique and Tanzania. We find that conservation agriculture increases farms’ labour input requirements. Higher demand is driven by more work during the harvesting and threshing stages. Increases in labour requirements are usually met by household labour, not paid work. The workload change is also higher for women than for men, and, in certain cases, is met by children.     

An optimal phased replanting approach for cocoa trees with application to Ghana

This study solves for the optimum replacement rate (ORR) and initial replacement year (IRY) of cocoa trees (Theobroma cacao) in Ghana to maximize net present value and achieve steady state by employing a phased replanting approach. The annual ORR is 5%–7% across the three production systems studied: Low Input, Landrace Cocoa, High Input, No Shade Amazon Cocoa, and High Input, Medium Shade Cocoa. The optimal IRY ranges from year 5 to year 9 as a function of cocoa prices, fertilizer prices, labor prices, and percentage yield loss due to disease outbreaks. Deterministic results project economic gains that exceed currently practiced replacement approaches by 5.57%–14.67% across production systems with reduced, annual income volatility. The method applied in this study can be used to increase cocoa yields and stabilize income over time, and facilitate substantial quality of life improvements for many subsistence cocoa farmers in Ghana and around the world.     

Cacao capitalism in coastal Ecuador: Production processes and accumulation in non‐transitionary agrarian capitalism during the long 19th century

Histories of agrarian capitalism have often been constrained by the implications of Robert Brenner's work on the subject. This essay, employing archival and secondary research on Ecuador's long 19th century experiences with cacao capitalism, argues that production processes and localized forms of accumulation, rather than class structure and legal relations, should be included in our definition of the concept. By focusing on how fixed capital in cacao trees and the production of the yearly cacao commodity responded to global demand and local material conditions, I propose amplifying the concept of agrarian capitalism, as well as a rethinking of coastal Ecuador's history of capitalist development. I highlight how both absolute and relative forms of surplus value generation coexisted in coastal Ecuador's cacao haciendas, while demonstrating how financial instruments used for extending the cacao frontier undermined the prospects for long‐term growth.     

Local economic impacts of an unconventional energy boom: the coal seam gas industry in Australia

Complementing the scarce economic literature about local impacts of energy extraction booms, this paper empirically investigates economic outcomes related to the new coal seam gas (CSG) industry located across southern Queensland. This Australian state has seen an unprecedented inflow of investments into the extraction of this previously unexploited unconventional natural gas over the last decade. We analyse census data to study income and employment effects associated with the CSG boom, exploiting the quasi‐experimental conditions provided by CSG extraction areas (treatment regions) and regions without this development (control regions). Findings show that treatment regions have higher income growth than control areas during 2001–2011 for families residing locally and for individuals present on census night. Employment in the mining sector also shows higher growth as has non‐mining employment in some areas. We include comparisons between CSG areas with no major mining history (the Surat basin) and CSG areas where mining was important before the CSG boom (the Bowen basin), to better understand boom effects in areas with different initial mining industry importance in their economies. Local job multipliers are also analysed for Surat basin CSG areas, where positive impacts (job spillovers) are restricted to construction and professional services jobs, while agricultural jobs have decreased.