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January 17th, 2018

Cities and agricultural transformation in Africa: Evidence from Ethiopia

Published by journal World Development,

This article in the journal World Development explores the relationship between proximity to a city and the production behavior of rural staple crop producers. More in particular, the study analyzes data from teff producing farmers in major producing areas around Addis Ababa, the Ethiopian capital. Due to the rapid growth of cities in Africa, more rural farmers are providing staple foods to urban residents. However, empirical evidence on how urbanization affects these farmers is scarce. It is found that farmers more closely located to Addis Ababa face higher wages, land rental rates, and teff prices, leading to better incentives to intensify production as seen in the uptake of modern inputs. Moreover, the authors observe that land and labor productivity as well as profitability in teff production improve with urban proximity. These results suggest that better connectivity of rural farmers to cities and growing urban demand for food are important associates of the process of agricultural intensification and transformation in Ethiopia. The working paper (PDF) suggests that the strong and significant direct effect of urban proximity is related with more use of formal factor markets, less transaction costs, and better access to information. The results show the importance of increasing investments in roads and other physical infrastructure to reduce farmers’ transportation costs and provide greater access to markets. Similarly, new communication systems make information exchange, cost searching, and communication less costly.

Curated from sciencedirect.com