Realizing the Gains from Trade: Export Crops, Marketing Costs, and Poverty
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This paper explores the role of export costs in the process of poverty reduction in rural Africa. We claim that the marketing costs that emerge when the commercialization of export crops requires intermediaries can lead to lower participation into export cropping and, thus, to higher poverty. We test the model using data from the Uganda National Household Survey. We show that: i) farmers living in villages with fewer outlets for sales of agricultural exports are likely to be poorer than farmers residing in market-endowed villages; ii) market availability leads to increased household participation in export cropping (coffee, tea, cotton, fruits); iii) households engaged in export cropping are less likely to be poor than subsistence-based households. We conclude that the availability of markets for agricultural export crops help realize the gains from trade. This result uncovers the role of complementary factors that provide market access and reduce marketing costs as key building blocks in the link between the gains from export opportunities and the poor.
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Country and Industry Studies of Trade F140, Measurement and Analysis of Poverty I320, Economic Development: Agriculture, Natural Resources, Energy, Environment, Other Primary Products O130, Economic Development: Human Resources, Human Development, Income Distribution, Migration O150, International Linkages to Development, Role of International Organizations O190, Agricultural Markets and Marketing, Cooperatives, Agribusiness Q130, Agriculture in International Trade Q170
