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Reforms and Rural Transformation : Are there Lessons for Africa from the Reform Experiences in China or Eastern Europe ? J. Swinnen University of Leuven CEPS Stanford University Brussels Dev Briefings September 2011. Reforms in …. EAST ASIA:
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Reforms and Rural Transformation : Are there Lessons for Africa from the Reform Experiences in China or Eastern Europe ?J. Swinnen University of LeuvenCEPSStanford UniversityBrussels Dev Briefings September 2011
Reforms in … • EAST ASIA: • “lifted hundreds of millions of people out of dire poverty” (World Bank, 2000) • “the biggest antipoverty program the world has ever seen” (McMillan, 2002) • EUROPE: initial disappointments & decline; recovery after a decade • AFRICA: “evidence is inconclusive … reforms have not met expectations” (Kherallah et al. 2002)
The Puzzle • Why such differences ? • What are lessons / implications ?
Papers • Rozelle S. and J. Swinnen, 2004, “Success and Failure of Reforms: Insights from the Transition of Agriculture” Journal of Ecomic Literature • Swinnen, J., Vandeplas, A. and M. Maertens, 2011, “Liberalization with Endogenous Institutions. A Comparative Analysis of Agric Reforms in Africa, Asia and Europe”, World Bank Economic Review
Some Lessons • Are perceptions correct ? • Price distortions • Farm structures • Institutions of exchange • FDI
Reforms and changes in gross agricultural OUTPUT (GAO) * *Year 1 is start of reform Data source: calculated and adapted from FAO statistics
Reforms and changes in average gross agricultural OUTPUT PER CAPITA* *Year 1 is start of reform Data source: calculated and adapted from FAO & ILO statistics
Reforms and changes in average Agricultural LABOR PRODUCTIVITY (ALP)* *Year 1 is start of reform Data source: calculated and adapted from FAO statistics
Reforms and changes in average agricultural YIELDS (land productivity) * *Year 1 is start of reform Data source: calculated and adapted from FAO statistics
Agricultural Output per Capita for SSA by commodity types Source: FAOstat
Agricultural Labor PRODUCTIVITY for Sub SSA by commodity types Source: FAOstat
2. Agricultural price distortions Source: OECD & World Bank
Losses in scale economies and disorganization Efficiency gains in labour governance O K/L Net benefits of shift to household farms Cost and benefits of small farms
Technology and the Nature of Productivity Gains • In labour-intensive regions: shift to small-scale individual farming caused dramatic gains in efficiency • In capital and land intensive regions, gains in productivity came from large farms shedding labour • => Labor adjustment is jointly endogenous with farm restructuring
4. Institutions of Exchange • Vertical coordination and interlinked contracting was very important both BEFORE and AFTER liberalization • Before: state-organized input and output markets • During: disintegration & disruptions • After: private VC
“Vertical coordination” includes : • Input supply programs • Trade credit • Investment assistance program • Bank loan guarantee programs • Extension services (technology and management) • .....
Reforms and vertical coordination in Eastern Europe(% of VC by dairy companies) Source: Swinnen et al. 2009
Institutions of exchange and commodity variations in SSA • Low value staple food crops • State remains important in exchange & VC • Private sector limited to spot market transactions • Less disruptions because limited external inputs • Industrial crops : • Medium value traditional export commodities • External inputs : Shift from public to private VC • Major contract enforcement problems • High value, high input non-traditional exports • Recent growth • Entirely private sector VC organized
High-value vegetable exports from Africa to Europe • All stronglyverticallycoordinated Cases: • Madagascar: all small farms • Senegal 1: no small farms • Senegal 2: mixture & dynamic changes
Household participation in High Value Vegetable Exports from Senegal
Growth in Fruit and Vegetable Exports in Africa, 1961 - 2005 Data source: FAO Statistics