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close this bookAgricultural Growth Linkages in Sub-Saharan Africa - Research Report 107 - Abstract (IFPRI, 1998, 4 p.)
close this folderAGRICULTURAL GROWTH LINKAGES IN SUB-SAHARAN AFRICA
View the document(introduction...)
View the documentAFRICAN RURAL GROWTH LINKAGES ARE HIGHER THAN EXPECTED
View the documentTRADABLE GOODS VERSUS NONTRADABLES
View the documentAS INCOMES RISE, DEMAND FOR FOOD REMAINS HIGH
View the documentWIDESPREAD INCOME GROWTH IS KEY
View the documentTHE POOR ALSO SHARE IN GROWTH

TRADABLE GOODS VERSUS NONTRADABLES

Using detailed household-level data gathered weekly or biweekly for one year in the 1980s in Burkina Faso, Niger, Senegal, and Zambia (with additional insights gained from field work in Zimbabwe), the report divides individual commodities and services into two sectors, farm and non-farm, and into two tradability categories, tradable and nontradable. Tradables, in this report, are defined as goods that, in theory can always be imported or exported at a price governed by markets outside of the zone in question. Nontradables are all goods, including bulky or perishable foods such as coarse grains and fresh meats, that are seldom traded and have no close tradable substitutes, as well as services, which by definition are nontradable. The farm sector includes all raw and unprocessed crops and livestock products, while everything else, including all processed farm goods, is considered to be in the nonfarm sector. In Africa, a great deal of nonfarm activity, such as services and processing, occurs on-farm rather than in market towns and villages as in Asia.

The report does not delve into the question of where the burst of new income that would jumpstart the rural economy and release demand would come from, but it assumes that the most likely source would be technological progress in agriculture or improvement in export prices for cash crops, since farm-produced tradables are more likely under African conditions to be competitive outside local areas than non-farm tradables. However, even in those rare cases where rural manufactures are viable exports in Africa, the effect of spending the new income in local areas is still likely to be to elicit new production of nontradable consumer items.

The report does not directly answer the question of whether demand increases for nontradables will be met entirely through new production or in part by price increases. It is assumed that all new demand for nontradables is met by new production through the pulling into production of underemployed labor and land. Because of this oversimplification, the quantitative multipliers in the report should be discounted by about 30 percent to arrive at conservative estimates of the true average linkages. However, the full multipliers illustrate the maximum gains that could be achieved if a facilitating environment permitted rural resources to flow into the production of goods and services that are increasing in demand.