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on Agricultural Economics |
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Issue of 2013‒05‒05
24 papers chosen by |
| By: | Merrigan, Kathleen A. |
| Keywords: | Agricultural and Food Policy, |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:ags:usao12:148034&r=agr |
| By: | Glauber, Joseph W. |
| Keywords: | Agricultural and Food Policy, |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:ags:usao13:148043&r=agr |
| By: | Holden, Stein (Centre for Land Tenure Studies, Norwegian University of Life Sciences) |
| Abstract: | The paper uses three years of household farm plot panel data (2006-2009), covering six districts in central and southern Malawi to assess factor productivity and farming system development under the input subsidy program. All farm plots of the households were measured with GPS. Maize production intensified in this period as maize area shares of the total farm size were reduced while input use intensity and yields increased. Yields of improved maize were significantly (+323 kg/ha) higher than for local maize. Improved maize seeds were used on only half of the maize plots that received subsidized fertilizer causing fertilizer use inefficiency. |
| Keywords: | Maize; Malawi; improved varieties; input subsidies; fertilizer use efficiency; land productivity; farming system changes |
| JEL: | Q16 Q18 |
| Date: | 2013–04–24 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nlsclt:2013_004&r=agr |
| By: | Francesco Bosello (Centro Euro-Mediterraneo sui Cambiamenti Climatici, Fondazione Eni Enrico Mattei and University of Milan, Italy); Lorenza Campagnolo (Centro Euro-Mediterraneo sui Cambiamenti Climatici, Fondazione Eni Enrico Mattei and University of Venice, Italy); Fabio Eboli (Centro Euro-Mediterraneo sui Cambiamenti Climatici, Fondazione Eni Enrico Mattei and University of Venice, Italy) |
| Abstract: | The present research offers an economic assessment of climate change impacts on the four major crop families characterizing Nigerian agriculture, covering more than 80% of agricultural value added. The evaluation is performed shocking land productivity in a computable general equilibrium model tailored to replicate Nigerian economic development until the mid of this century. The detail of land uses in the model has been also increased differentiating land types per agro ecological zones. Uncertainty on future climate is captured, using, as input, yield changes computed by a crop model, covering the whole range of variability produced by an envelope of one RCM and tem GCM runs. Climate change turns to be unambiguously negative for Nigeria in the medium term with production losses, increase in crop prices, higher food dependency on foreign imports and GDP losses in all the simulations after 2025. In a second part of the paper a cost effectiveness analysis of adaptation in Nigeria agriculture is conducted. Adaptation practices considered are a mix of cheaper “soft measures” and more costly “hard” irrigation expansion. The main result is that cost effectiveness of the whole package crucially depends on the possibility to implement adaptation exploiting low cost opportunities. In this case all climate change damages can be offset with a benefit cost ration larger than one in all the climate regimes. Expensive irrigation expansion should however be applied on a much more limited acreage compared with soft measures. If adaptation costs are those of the high end estimates, full adaptation ceases to be cost/effective.This points out the need of a careful planning and implementation of adaptation, irrespectively on the type, looking for measures apt to control its unit cost. |
| Keywords: | Climate Change, Impact, Adaptation, Agriculture, CGE Modelling |
| JEL: | C68 Q51 Q54 Q15 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2013.35&r=agr |
| By: | Kassie, Menale; Jaleta, Moti; Shiferaw, Bekele; Mmbando, Frank; Muricho, Geoffrey |
| Abstract: | Soil fertility depletion is considered the main biophysical limiting factor to increasing per capita food production for most smallholder farmers in Africa. The adoption and diffusion of sustainable agricultural practices (SAPs), as a way to tackle this impediment, has become an important issue in the development policy agenda for sub-Saharan Africa. This paper examines the adoption decisions for SAPs, using multiple cross-sectional plot-level observations, collected in 2010 from 681 farm households and 1,539 plots, in 4 districts and 88 villages of rural Tanzania. We employ a multivariate probit technique to model simultaneous adoption decisions by farm households. Our study reveals that rainfall shocks, insects and disease shocks, government effectiveness, tenure status of plot, social capital, plot location and size, and asset ownership, all influence the adoption decision of sustainable practices. Policies that target SAPs and are aimed at organizing farmers into associations, improving land tenure security, and enhancing skills of civil servants can increase the likelihood that smallholder farmers will adopt SAPs. |
| Keywords: | sustainable practices, multiple adoption, multivariate probit, Tanzania |
| JEL: | C01 O55 Q01 Q16 |
| Date: | 2012–01–27 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-12-02-efd&r=agr |
| By: | Vincent Martinet |
| Abstract: | Biofuel policies (blend mandate or tax credit) have impacts on food and energy prices, and on land-use. The magnitude of these effects depends on the market response to price, and thus on the agricultural supply curve, which, in turn, depends on the land availability (quantity and agronomic quality). To understand these relationships, we develop a theoretical framework with an explicit representation of land heterogeneity. The elasticity of the supply curve is shown to be non-constant, depending on land heterogeneity and the availability of land for agricultural expansion. This influences the welfare economics of biofuels policies, and the possible carbon leakage in land and fuel markets. We emphasize that the impacts of biofuel policies on welfare and land-use change depend strongly on the potential development of the agricultural sector in terms of expansion and intensification, and not only on its current size. |
| Keywords: | Agricultural and energy market, Biofuels, Land use, Soil heterogeneity, Welfare |
| Date: | 2012–03–05 |
| URL: | http://d.repec.org/n?u=RePEc:apu:wpaper:2012/01&r=agr |
| By: | Hiemenz, Ulrich |
| Abstract: | The paper reviews and evaluates the global political discussions of G-8 and G-20 Member countries on food security and food price volatility since the L’Aquila Initiative in 2009. It shows that some progress was achieved with respect to better coordination of agricultural policies and stricter regulation of financial markets, especially at the 2011 Cannes Summit Meeting of the G-20. However, no agreement was reached in areas crucial for food security such as biofuel mandates or agricultural trade policies. A discretionary approach towards stabilizing food prices may, however, rather exacerbate than mitigate volatility. Regarding financial markets the respective initiatives of the US and the EU prove the willingness of the executive to control excessive speculation, but the legislative procedure has not been completed, and interest groups are working to water down the proposed provisions. In the preparations for the upcoming G-8 and G-20 Meetings no new impulses for food security are discernable. The priority lists are topped by macro-economic issues. Under these circumstances developing countries will have no choice but to forge new alliances to bring the food security issue back to the global agenda. |
| Keywords: | Global agricultural policies, food security, food price volatility, financial agricultural investment, Agricultural and Food Policy, Agricultural Finance, Financial Economics, Food Security and Poverty, |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:ags:ubonwp:147914&r=agr |
| By: | von Braun, Joachim; Gerber, Nicolas; Mirzabaev, Alisher; Nkonya, Ephraim M. |
| Abstract: | Healthy soils are essential for sustaining economies and human livelihoods. In spite of this, the key ecosystem services provided by soils have usually been taken for granted and their true value – beyond market value – is being underrated. This pattern of undervaluation of soils is about to change in view of rapidly raising land prices, which is the result of increased shortage of land and raising output prices that drive implicit prices of land (with access to water) upward. Moreover, the value of soil related ecosystems services is being better understood and increasingly valued. It is estimated that about a quarter of global land area is degraded, affecting about 1.5 billion people in all agro-ecologies around the world. Land degradation has its highest toll on the livelihoods and well-being of the poorest households in the rural areas of developing countries. Vicious circles of poverty and land degradation, as well as transmission effects from rural poverty and food insecurity to national economies, critically hamper their development process. Despite the need for preventing and reversing land degradation, the problem has yet to be appropriately addressed. Policy action for sustainable land use is lacking, and a policy framework for action is missing. Key objectives of this Issue Paper and of a proposed related global assessment of the Economics of Land Degradation (ELD) are: first, to raise awareness about the need for and role of an assessment of the economic, social and environmental costs of land degradation; and second, to propose and illustrate a scientific framework to conduct such an assessment, based on the costs of action versus inaction against land degradation. Preliminary findings suggest that the costs of inaction are much higher than the costs of action. |
| Keywords: | Economics of Land Degradation, ecosystem services, land degradation neutrality, Agricultural and Food Policy, Community/Rural/Urban Development, Environmental Economics and Policy, Food Consumption/Nutrition/Food Safety, Food Security and Poverty, International Development, Land Economics/Use, Resource /Energy Economics and Policy, |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:ags:ubonwp:147910&r=agr |
| By: | Jatta, Sylvester |
| Abstract: | Abstract Urban agriculture may have an important role to play in addressing food insecurity problems, which are bound to become increasingly vital with the secular trends towards the urbanization of poverty and of population in developing countries. Our understanding of the importance, and food security implications of urban agriculture is however plagued by a lack of high quality, reliable data. While studies based on survey research data do exists for several major cities, much of the evidence is still qualitative if not anecdotal. Using a recently created data set bringing together comparable, nationally representative household survey data for 15 developing or transition countries, this paper analyzes in a comparative international perspective the importance of urban agriculture for the urban poor and food insecure. On the one hand, the potential for urban agriculture to play a substantial role in urban poverty and food insecurity reduction should not be overemphasized, as its share in income and overall agricultural production is often quite limited. On the other hand, though, its role should also not be too easily dismissed, particularly in much of Africa agriculture provides a substantial share of income for the urban poor, and for those groups of households for whom it constitutes an important source of livelihood. We also find fairly consistent evidence of a statistical association between engagement in urban agriculture and dietary adequacy indicators. |
| Keywords: | Keywords: Urban agriculture; Food security; Nutrition, Household surveys |
| JEL: | Q18 |
| Date: | 2013–04–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:46544&r=agr |
| By: | Cessna, Jerry |
| Keywords: | Agricultural and Food Policy, Livestock Production/Industries, |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:ags:usao13:148067&r=agr |
| By: | Tsegai, Daniel W.; McBain, Florence; Tischbein, Bernhard |
| Abstract: | Inadequate access to safe water and sanitation services coupled with poor hygiene practices continues to kill, sicken and diminish opportunities of millions of people in developing countries. Various interventions to improve drinking water quality and service levels, sanitation and hygiene (WSH) have been applied, albeit in isolated approaches. Relevant literature focused on assessing the cost and health effectiveness of such approaches. In parallel, irrigation in agriculture, which affects all the water cycle and thus drinking water quality and quantity, has been developed without looking into the consequences for WSH. In this paper, we argue that the ‘nexus’ approach should take peoples’ multiple water needs as a starting point for providing integrated services and thus move beyond conventional sectoral barriers of domestic and productive sectors. Isolated approaches have their drawbacks missing out on positive externalities on health and nutrition outcomes. We also argue that (the prospect of) a holistic approach including WSH and agriculture sectors for a long term health and nutrition impact should be explored. The paper reviews the body of literature dealing with WSH and irrigation agriculture, synthesizes the remarks thereof and concludes with suggestions to unravel the ‘nexus’ between WSH and agriculture for a long term health and nutrition impact. |
| Keywords: | Nexus, water, sanitation and hygiene, agriculture, intervention approaches, Agricultural and Food Policy, Community/Rural/Urban Development, Environmental Economics and Policy, Food Consumption/Nutrition/Food Safety, Food Security and Poverty, Health Economics and Policy, |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:ags:ubonwp:147912&r=agr |
| By: | Baumuller, Heike |
| Abstract: | The use of mobile phones in poverty reduction and development has ignited much interest over the past decade. To take advantage of the rapid expansion of mobile phones in developing countries, businesses, government agencies and non-governmental organisations are increasingly turning their attention to the delivery of services through mobile phones in areas such as health, education and agriculture. This paper examines how such m-services could be and are already being used to facilitate agricultural technology adoption among farmers in developing countries, including accessing, using and generating income from new technologies. The paper argues that m-services could help to overcome some of the obstacles to technology adoption by facilitating access to information and learning, financial services, and input and output markets. Existing studies assessing the impacts of mobile phones already point to the potential benefits for poverty reduction and rural development. However, there is a risk that the poorest and marginalised may fall behind. Further research is needed to understand how their particular challenges could be addressed through m-services and other support activities, and how they might become active players in the demand for m-services. Such research will need to draw on various disciplines to allow for an analysis of the economic, social and biophysical dimensions of the users, farming contexts and technologies. |
| Keywords: | mobile phones, m-services, agriculture, technology adoption, poverty, Community/Rural/Urban Development, Farm Management, Food Consumption/Nutrition/Food Safety, Food Security and Poverty, International Development, Land Economics/Use, Livestock Production/Industries, |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:ags:ubonwp:147913&r=agr |
| By: | Damte, Abebe; Koch, Steven F.; Mekonnen, Alemu |
| Abstract: | This study uses survey data from randomly selected rural households in Ethiopia to examine the coping mechanisms employed by rural households to deal with fuelwood scarcity. The determinants of collecting other biomass energy sources were also examined. The results of the empirical analysis show that rural households in forest-degraded areas respond to fuelwood shortages by increasing their labor input for fuelwood collection. However, for households in high forest cover regions, forest stock and forest access may be more important factors than scarcity of fuelwood in determining household’s labor input to collect it. The study also finds that there is limited evidence of substitution between fuelwood and dung, or fuelwood and crop residue. Therefore, supply-side strategies alone may not be effective in addressing the problem of forest degradation and biodiversity loss. Any policy on natural resource management, especially related to rural energy, should distinguish regions with different levels of forest degradation. |
| Keywords: | fuelwood, labor allocation, biomass, rural Ethiopia |
| JEL: | Q12 Q21 Q42 |
| Date: | 2012–01–27 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-12-01-efd&r=agr |
| By: | Corsi, Alessandro (Università di Torino, Department of Economics); Strøm, Steinar (Dept. of Economics, University of Oslo) |
| Abstract: | Organic wines are increasingly produced and appreciated. Since organic production is more costly, a crucial question is whether they benefit from a price premium. We estimate hedonic price functions for Piedmont organic and conventional wines. We use data on the production side in addition to variables of interest for consumers. Our results show that, along with characteristics of interest to consumers, some farm and producer characteristics not directly relevant for consumers do significantly affect wine prices. We find that organic wine tends to obtain higher prices than conventional wine. The price premium is not simply an addition to other price components, but organic quality modifies the impact of the other variables on price. |
| Keywords: | Organic wines; Hedonic price functions; Farming; Prices; Price variables |
| JEL: | C21 D49 L11 Q12 |
| Date: | 2013–03–11 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:osloec:2013_007&r=agr |
| By: | Pangaribowo, Evita Hanie; Gerber, Nicolas; Torero, Maximo |
| Abstract: | In this paper, we review existing food and nutrition security indicators, discuss some of their advantages and disadvantages, and finally classify them and describe their relationships and overlaps. In order to achieve this, the paper makes reference to the existing definitions of food and nutrition security (FNS), in particular as they have been agreed upon and implemented in the FoodSecure project (www.foodsecure.eu). The main existing conceptual frameworks of FNS predating the present paper are also used as guidelines and briefly discussed. Finally, we make recommendations in terms of the most appropriate FNS indicators to quantify the impacts of various shocks and interventions on food and nutrition security outcomes. |
| Keywords: | Food security, nutrition, indicators, outcomes, determinants, classification, Agricultural and Food Policy, Crop Production/Industries, Food Consumption/Nutrition/Food Safety, Food Security and Poverty, |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:ags:ubonwp:147911&r=agr |
| By: | Adams, Mike; Durkin, Bryan T.; Baudler, David; Irwin, Scott H.; Norton, Laurnce J. |
| Keywords: | Agricultural and Food Policy, Risk and Uncertainty, |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:ags:usao13:148046&r=agr |
| By: | Elena Lasarte Navamuel (REGIOlab - University of Oviedo - Oviedo, Spain.); Fernando Rubiera Morollón (REGIOlab - University of Oviedo - Oviedo, Spain.); Dusan Paredes Araya (IDEAR - Department of Economics, Universidad Católica del Norte - Chile) |
| Abstract: | Empirical evidence on consumer behavior is of major importance in the formulation and analysis of economic policies. Changes in prices, income level, or decisions regarding taxes or other structural reforms that effect relative prices may produce very different effects depending on family income distribution or also across space. The aim of this paper is to estimate expenditure and own-price elasticities for ten aggregated food product groups using the Spanish Household Budget Survey for the year 2010. These products are the ones for which the survey provides information regarding prices and quantities, thus allowing the application of the Almost Ideal Demand System model (AIDS). This stimation procedure allows comparisons to be made not only among different levels of income, but also how relevant could be the place of residence characteristics. The results confirm that the size of the city in which the household resides has a similar significant and relevant effect on consumption patterns as family income level. This is especially clear with own-price elasticities. In Spain, large cities show a greater response to price changes tan small cities or rural areas. |
| Keywords: | Almost Ideal Demand Systems (AIDS), food elasticities, Spain and municipality size. |
| JEL: | D12 R12 R22 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:cat:dtecon:dt201303&r=agr |
| By: | Bekchanov, Maksud; Bhaduri, Anik; Ringler, Claudia |
| Abstract: | Increasing water demand due to population growth and economic development under the mounted investment costs for developing new water sources calls for efficient, equitable and sustainable management of water resources in many developing countries. This is more essential in the Aral Sea basin where the tremendous development in irrigation since the 1960s combined with unbalanced water resources management led to the destruction of the ecosystems in the delta zone and the gradual desiccation of the Aral Sea, once the fourth biggest lake of the world with a surface area of 68,000 km2 and total water volume of 1,100 km3. Disintegration of the Central Asian states after the collapse of the Soviet Union also increased the tensions among up- and downstream users over sharing water resources. Insufficient investments in irrigation infrastructure, lack of economic incentives to adopt water-wise approaches, and inefficient water governance and institutions have been the main reasons of decreased water use efficiency in the post-Soviet period. Market-based water allocation is tested to deal with aggravating water conflicts in the Aral Sea basin. Aggregated integrated hydro-economic model is constructed to analyze the water market mechanism as an alternative option to the traditional administrative water allocation. Water users are allowed to trading their water use rights and increasing their benefits under this decentralized water management system. The analyses show the availability of additional gains amounted to US$ 373 to 476 million under inter-catchment water trading depending on the level of water availability. Similarly, additional gains of US$ 259 to 339 million are estimated under intra-catchment water trading. Furthermore, increased trend of additional gains from water trading along with decreased water availability are found. However, transaction costs of introducing tradable water rights are essential to judge the effectiveness of water market reforms and initiate appropriate institutional changes. According to our estimations, transaction costs of more than 5 ¢/m3 of traded water use rights eliminate the potential benefits of the water trading option. Friendly relationships among the riparian countries and infrastructural improvements are suggested as a means of developing low cost enforcement of water trading contracts. |
| Keywords: | water trading, transaction costs, environmental flow, hydro-economic model, Agribusiness, Agricultural Finance, Community/Rural/Urban Development, Crop Production/Industries, Environmental Economics and Policy, Land Economics/Use, |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:ags:ubzefd:148054&r=agr |
| By: | Jatta, Sylvester |
| Abstract: | Abstract Using national data from 14 representative developing countries, this paper explores rural wage employment and its potential as a mechanism for improving the living standards of the rural poor. The analysis suggests that the sector of employment (agricultural or non-agricultural) and the overall household livelihood strategy appear to be of limited importance in determining whether a household uses wage employment as a pathway out of poverty. Rather, high-productivity wage employment appears to be linked to the underlying assets of the household and its individual members. In particular, the evidence points to educational and infrastructure investment as critical for providing opportunities in the labour market that lead to higher wages. The analysis also suggests that gender is very important for participation in labour markets as well as wages earned in those markets, indicating that special attention be given to the gender consequences of any labour policy. |
| Keywords: | Key words: rural labour market, mechanism,assets, educational and infrastructure investment, labour markets, gender, pathway out of poverty, livelihood strategies, non-agricultural employment. |
| JEL: | R00 |
| Date: | 2013–04–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:46543&r=agr |
| By: | Aguiar, Angel; Terrie Walmsley |
| Abstract: | The prevalence of undocumented workers in the United States is a sensitive issue for U.S. policy makers with numerous policy responses contemplated by several different administrations. This paper examines the impact of possible reforms to U.S. immigration policy with respect to undocumented workers on the U.S. and Mexican economies. Using a global trade and migration model that considers undocumented workers, we find that undocumented workers have a positive impact on the U.S. economy and on the agricultural sector. Legalization of these undocumented workers emerges as the preferred option, although additional considerations may be required to assist the agricultural sector. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:gta:workpp:4257&r=agr |
| By: | R. Karina Gallardo; Aaron Olanie; Rita Ordonez; Marcia Ostrom (School of Economic Sciences, Washington State University) |
| Abstract: | One alternative for farmers’ markets to increase sales and expand the customer base is to implement wireless capability (credit and debit card, and electronic benefits transfer readers) at the markets. We estimate the value farmers’ markets managers and vendors posit on wireless machines attributes, and the values customers posit on markets’ features. The quality of the wireless machine technology and the machine provider customer service are the most important attributes for, respectively, managers and vendors. Consumers are willing to pay premium prices at farmers’ markets where this technology is available. This information is useful to policy makers and wireless machine providers to implement wireless capability at farmers markets. |
| Keywords: | farmers markets, sales, wireless capability |
| JEL: | Q13 Q18 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:wsu:wpaper:gallardo-8&r=agr |
| By: | Aaditya Mattoo (World Bank); Arvind Subramanian (Peterson Institute for International Economics) |
| Abstract: | Generating technological progress requires deploying the full range of policy instruments, including those related to trade policy. The authors consider four areas: subsidization of green goods and technologies; border-tax adjustments (BTAs) related to carbon content; restrictions on the export of fossil fuels, especially natural gas; and intellectual property protection of new technologies and products related to climate change. They propose changes to trade rules that would promote climate change goals. The proposed changes have an underlying political economy logic and consistency. Changes would allow global environmental "bads" to be penalized (by permitting border taxes on less clean imports), global environmental goods and technologies to be promoted (by relaxing the constraints on the use of production and export subsidies and strengthening IPR protection), and prevent global environmental "goods" being penalized (by eliminating the export restrictions on natural gas). |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:iie:pbrief:pb13-10&r=agr |
| By: | Basak Bayramoglu; Jean-François Jacques |
| Abstract: | There is an ongoing debate over the potential effects of international trade on fishery resources. In this study, we investigate whether the trade in fish and fish products contributed to the decline in a given number of fish species in Turkey. The overall purpose is to test the theoretical findings of Brander and Taylor (1997) who argue that trade openness decreases fish harvest in a small open economy characterized by a regime of open-access to fishery resources. To this end, we estimate a panel data model to measure the effects of trade openness on fish harvests in the case of 57 fish species observed from 1996 to 2009 in Turkey. We estimate Turkish fish harvests in terms of the relative importance of openness to trade as well as in terms of biological characteristics, in addition to economic and technological factors. Estimation results reveal a backward-bending supply curve for the fish harvest. Furthermore, we find that the indicator of openness to trade has a significant and positive impact on the fish harvest. Our results suggest that further openness to trade would put additional pressure on Turkey’s already declining fishery resources. |
| Keywords: | Openness to trade, Fish harvest, Fishery technology, Biological factors, Panel data model |
| JEL: | Q22 Q56 C33 |
| Date: | 2012–01–31 |
| URL: | http://d.repec.org/n?u=RePEc:apu:wpaper:2012/02&r=agr |
| By: | Klarizze Anne Martin Puzon (LAMETA-Université Montpellier I, France) |
| Abstract: | This study proposes a new mechanism for the resource curse: crowding-out of innovation due to the existence of an option to engage in conflict. Using a game theoretical framework, it is argued that an increase in the amount of natural resources (in the informal sector here conflict for a common-pool rent materializes) reduces the incentives of entrepreneurial groups to engage in cost-reducing R&D (in the non-resource sector where production occurs). Compared to most models of the resource curse, the impact of resource abundance on income and welfare was interestingly observed to be non-monotonic. An increase in the amount of resources in the common pool induces intensified conflict among groups and less R&D investment. Depending on the relative strengths of the income and diversion effects, three scenarios were exhibited. First, there is a 1.) Pure Blessing. This happens when both the extent of technological spillovers and the initial level of resource are low. Starting from scarcity, the increase in natural resource generates an overall jump in the groups' income levels. Even if an increase in resources decreases innovation in the formal sector, both income and welfare still go up. Meanwhile, for intermediate initial values of the natural resource, there is a 2.) Pseudo-curse. A resource boom induces an immediate income effect. However, this income gain is dominated by the indirect diversion effect due to lower output and higher price (because of less cost-reducing R&D). Consequently, while income increases, the welfare of the economy decreases. The range of resource levels where this occurs is greater when spillovers are high. Finally, a 3.) Double Curse occurs for extremely high initial levels of natural resources. Both aggregate income of the economy and welfare suffer. |
| Keywords: | Innovation, Appropriation, Natural Resources |
| JEL: | O13 Q33 P48 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2013.30&r=agr |