reforms and rural transformation : are there lessons for africa from the reform experiences in china...
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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 LeuvenCEPS
Stanford University
Brussels 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 Lessons1. Are perceptions correct ?
2. Price distortions
3. Farm structures
4. Institutions of exchange
5. FDI
1. Developments
Reforms and changes in gross agricultural OUTPUT (GAO) *
-40
-20
0
20
40
60
80
100
0 1 2 3 4 5 6 7 8 9 10 11 12
Years after start of reform
GA
O In
dex CEE
FSU
EA
SSA
*Year 1 is start of reform
Data source: calculated and adapted from FAO statistics
Reforms and changes in average gross agricultural OUTPUT PER CAPITA*
-50
-40
-30
-20
-10
0
10
20
30
40
50
0 1 2 3 4 5 6 7 8 9 10 11 12
Years after start of reform
GA
O/c
apita
Ind
ex
CEE
FSU
EA
SSA
*Year 1 is start of reform
Data source: calculated and adapted from FAO & ILO statistics
Reforms and changes in average Agricultural LABOR PRODUCTIVITY (ALP)*
-30
-20
-10
0
10
20
30
40
50
0 1 2 3 4 5 6 7 8 9 10 11 12
Years after start of reform
ALP
Inde
x CEE
FSU
EA
SSA
*Year 1 is start of reform
Data source: calculated and adapted from FAO statistics
Reforms and changes in average agricultural YIELDS (land productivity) *
-20
-10
0
10
20
30
40
0 1 2 3 4 5 6 7 8 9 10 11 12
Years after start of reform
Yie
ld In
dex
CEE
CIS
EA
SSA
*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
-10
-5
0
5
10
15
0 2 4 6 8 10 12
Years after start of reform
GA
O p
er
ca
pit
a In
de
x
cereals, rootsand tubers
fruits andvegetables
industrial crops
all commodities
Agricultural Labor PRODUCTIVITY for Sub SSA by commodity types
Source: FAOstat
2. Agricultural price distortions
Source: OECD & World Bank
3. Farms & Labour
Cost and benefits of small farms
OK/L
Efficiency gains in labour governance
Losses in scale economies and disorganization
Net benefits of shift to household farms
Labor intensity and the shift to small farms
Balkan
Caucasus
Central EurCore CIS
China
0
20
40
60
80
100
0 0,2 0,4 0,6 0,8
Pre-reform labor intensity (person/ha)
Ind
ivid
ua
l fa
rmin
g 5
ye
ars
afte
r re
form
(s
ha
re o
f la
nd
use
)
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
PATTERNS OF RURAL TRANSITION
TaTuRu Uz
Md KyUk
Be
Ro
Li
Po
Lv Sn
Sk
Cz
Hu
Es
Bu
Bu
RoLi
Lv Sn
Po
Ky
TuTa
Md
Uz
Uk
Ru
BeSk
Cz
Hu
Es
0
10
20
30
40
50
60
70
80
90
100
-80 -60 -40 -20 0 20 40 60
Change in agr. labour
Sh
are
of
lan
d in
IF
year 0
year 4
year 8
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)
0
10
20
30
40
50
60
70
80
90
2 2.5 3 3.5 4
EBRD Reform IndexSource: 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 strongly vertically coordinated
Cases: • Madagascar: all small farms• Senegal 1: no small farms• Senegal 2: mixture & dynamic
changes
Household participation in High Value Vegetable Exports from
Senegal
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
1990 1992 1994 1996 1998 2000 2002 2004
Year
Sh
are
of
ho
us
eh
old
s
contract-farming wage employment total
Growth in Fruit and Vegetable Exports in Africa, 1961 - 2005
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
1961 1966 1971 1976 1981 1986 1991 1996 2001
Year
ex
po
rt v
alu
e (
mill
ion
$)
Data source: FAO Statistics
5. FDI growth with liberalization (flow)
Concluding comments