Market Access, Trade Costs, and Technology Adoption: Evidence from Northern Tanzania / Shilpa Aggarwal, Brian Giera, Dahyeon Jeong, Jonathan Robinson, Alan Spearot.

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Aggarwal, Shilpa

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Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w25253.Publication details: Cambridge, Mass. National Bureau of Economic Research 2018.Description: 1 online resource: illustrations (black and white)Subject(s):

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Abstract: In this paper, we quantify market access in rural Tanzania, and the extent to which it constrains agricultural productivity. We collect granular data on farmer input and sales decisions, input and output prices, and travel costs in all 1,183 villages in two regions of Tanzania. We find that a village in the 90th percentile of the travel-cost adjusted price distribution faces input and output prices 40-55% less favorable than a village at the 10th percentile. In reduced form, an additional standard deviation of travel time is associated with 20-25% lower input adoption and output sales. We develop and quantify a spatial model of input adoption and conservatively estimate that farmers behave as if they face travel costs of 6% ad-valorem per kilometer of travel, which is equivalent to 40% when traveling to the closest retailer. Holding exogenous local factors fixed, we estimate that reducing travel costs by 50% (approximately the effect of paving rural roads) doubles adoption and reduces the adoption-remoteness gradient by 18%.

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Holdings
Item type	Home library	Collection	Call number	Status	Date due	Barcode	Item holds
Working Paper	Biblioteca Digital	Colección NBER	nber w25253 (Browse shelf(Opens below))	Not For Loan

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November 2018.

In this paper, we quantify market access in rural Tanzania, and the extent to which it constrains agricultural productivity. We collect granular data on farmer input and sales decisions, input and output prices, and travel costs in all 1,183 villages in two regions of Tanzania. We find that a village in the 90th percentile of the travel-cost adjusted price distribution faces input and output prices 40-55% less favorable than a village at the 10th percentile. In reduced form, an additional standard deviation of travel time is associated with 20-25% lower input adoption and output sales. We develop and quantify a spatial model of input adoption and conservatively estimate that farmers behave as if they face travel costs of 6% ad-valorem per kilometer of travel, which is equivalent to 40% when traveling to the closest retailer. Holding exogenous local factors fixed, we estimate that reducing travel costs by 50% (approximately the effect of paving rural roads) doubles adoption and reduces the adoption-remoteness gradient by 18%.