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Lessons for African Rural Reforms: Insights from China and Europe

Explore successful and failed reform experiences in agrarian systems of Asia, Europe, and Africa to uncover valuable lessons and implications. Analyze price distortions, labor productivity, farm restructuring, and institutional exchange dynamics.

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Lessons for African Rural Reforms: Insights from China and Europe

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  1. 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

  2. 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)

  3. The Puzzle • Why such differences ? • What are lessons / implications ?

  4. 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

  5. Some Lessons • Are perceptions correct ? • Price distortions • Farm structures • Institutions of exchange • FDI

  6. 1. Developments

  7. Reforms and changes in gross agricultural OUTPUT (GAO) * *Year 1 is start of reform Data source: calculated and adapted from FAO statistics

  8. 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

  9. Reforms and changes in average Agricultural LABOR PRODUCTIVITY (ALP)* *Year 1 is start of reform Data source: calculated and adapted from FAO statistics

  10. Reforms and changes in average agricultural YIELDS (land productivity) * *Year 1 is start of reform Data source: calculated and adapted from FAO statistics

  11. Agricultural Output per Capita for SSA by commodity types Source: FAOstat

  12. Agricultural Labor PRODUCTIVITY for Sub SSA by commodity types Source: FAOstat

  13. 2. Agricultural price distortions Source: OECD & World Bank

  14. 3. Farms & Labour

  15. 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

  16. Labor intensity and the shift to small farms

  17. 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

  18. PATTERNS OF RURAL TRANSITION

  19. 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

  20. “Vertical coordination” includes : • Input supply programs • Trade credit • Investment assistance program • Bank loan guarantee programs • Extension services (technology and management) • .....

  21. Reforms and vertical coordination in Eastern Europe(% of VC by dairy companies) Source: Swinnen et al. 2009

  22. 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

  23. 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

  24. Household participation in High Value Vegetable Exports from Senegal

  25. Growth in Fruit and Vegetable Exports in Africa, 1961 - 2005 Data source: FAO Statistics

  26. 5. FDI growth with liberalization (flow)

  27. Concluding comments

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