Why liberalization alone has not improved agricultural productivity in Zambia: the role of asset ownership and working capital constraints

Klaus Deininger and Pedro Olinto

No 2302, Policy Research Working Paper Series from The World Bank

Abstract: The authors use a large panel data set from Zambia to examine factors that could explain the relatively lackluster performance of the country's agricultural sector after liberalization. Zambia's liberalization significantly opened the economy but failed to alter the structure of productionor help realize efficiency gains. They reach two main conclusions. First, not owning productive assets (in Zambia, draft animals and implements) limits improvements in agricultural productivity and household welfare. Owning oxen increases income directly, allows farmers to till their fields efficiently when rain is delayed, increases the area cultivated, and improves access to credit and fertilizer markets. Second, the authors reject the hypothesis that the application of fertilizer is unprofitable because of high input prices. Rather, fertilizer use appears to have declined because of constraints on supplies, which government intervention exacerbated instead of alleviating. (Extending the use of fertilizer to the many producers not currently using it would be profitable, but increasing the amount applied by the few producers who now have access to it would not be.) Policies to foster accumulation of the assets needed for agricultural production (including draft animals and implements) and to provide complementary public goods (education, credit, and good agricultural extension services) could greatly help reduce poverty and improve productivity.

Keywords: Economic Theory&Research; Environmental Economics&Policies; Labor Policies; Banks&Banking Reform; Agricultural Knowledge&Information Systems; Environmental Economics&Policies; Economic Theory&Research; Banks&Banking Reform; Agricultural Knowledge&Information Systems; Agricultural Research (search for similar items in EconPapers)
Date: 2000-03-31
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (33)

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