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Vol. 114: Woldie, Getachew A.: Econometric Analyses of Small-Scale Banana Markets in Southern Ethiopia


A New Institutional Economics Perspective

A rapid growth of high value crops in the international trade is becoming an incentive for a significant rise in production and export of these crops, especially in developing countries. In the Ethiopian case, given the declining export earnings from traditional exports, policy makers as well as donor agencies have shifted their attention towards diversification of export crop production for potential income growth. To this end, major rural development strategies of the country envisage significant scope for achieving greater diversification and commercialization of smallholders. The move towards high value crop production and marketing, however,  requires a huge role of markets and institutions. This study investigates the Ethiopian banana market from a New Institutional Economics (NIE) perspective by using both econometric and mathematical models in order to identify intervention points that accelerate market integration. The result among others reveals that the market is characterized by existence of high transaction costs related to information and search, negoitations and bargaining, as well as monitoring and enforcements. It is learned that households with better bargaining power, better access to transporation, information, as well as members of farmers of organizations are better off in terms of income generation. Result from a mathematical programming model also showed that farmers‟ current market channel choice decision is sub-optimal. Hence, enhancing high-value crops production and marketing and in turn improving the livelihood of smallholders highly depends on minimizing the market inperfections. This may require policy makers to focus on: establishing appropriate institutions, improving market information systems, developing rural infrastructure, strengthening farmers organization, resolving financial constraints through credit, enhancing value added capacity, encouraging competition, as well as encouraging investment that accelerate future vertical and horizontal integration.


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Farming & Rural systems Economics Vol. 113
ISSN 1616-9808
2010; XVIII + 218 pp., 21 x 14,8 cm; paper

28.00 EUR
Artikelnr.: 978-3-8236-1593-4
  • (price without VAT: 26.17 EUR)
  • (VAT: 1.83 EUR)