Source: PURDUE UNIVERSITY submitted to
AGRICULTURAL INNOVATION AND GOVERNMENT POLICY
Sponsoring Institution
National Institute of Food and Agriculture
Project Status
TERMINATED
Funding Source
Reporting Frequency
Annual
Accession No.
0178218
Grant No.
(N/A)
Project No.
IND010524
Proposal No.
(N/A)
Multistate No.
(N/A)
Program Code
(N/A)
Project Start Date
Oct 1, 2008
Project End Date
Sep 30, 2013
Grant Year
(N/A)
Project Director
Masters, W. A.
Recipient Organization
PURDUE UNIVERSITY
(N/A)
WEST LAFAYETTE,IN 47907
Performing Department
Agricultural Economics
Non Technical Summary
Slow and uneven agricultural productivity growth around the world is a major source of economic and political instability. To raise incomes and provide improved nutrition at lower cost, new technologies must be developed and deployed as quickly as possible, targeted to the conditions under which they are most needed. Our cross-country research helps identify the conditions under which productivity has grown most successfully, to guide national policy-makers in the United States and abroad towards more appropriate levels of investment in agricultural technology. Then we address the mechanisms used to allocate that investment, because incentives for innovation are especially difficult to design: before a new technology is developed, no one can know what it is worth - and after it is developed, rapid adoption requires giving it away for free. Promoters of new technology have long used grants, contracts and budget support to universities and applied science laboratories, and also used the allocation of patent protection and other intellectual property rights to private firms. A third approach involves the sponsorship of prize funds, paid to innovators only after their achievements are observed. We can use both historical and experimental analysis of how people respond to these kinds of incentives, to identify when each mechanism can be most effective.
Animal Health Component
(N/A)
Research Effort Categories
Basic
30%
Applied
60%
Developmental
10%
Classification

Knowledge Area (KA)Subject of Investigation (SOI)Field of Science (FOS)Percent
6066010301030%
6096010301020%
6106110301020%
6116120301030%
Goals / Objectives
The general objective of this project is to identify and measure the determinants of technological change in agriculture, focusing on how government policy affects incentives for innovation and hence the speed and direction of new technology development, dissemination and adoption. Our specific objectives are: (1) to explain cross-country differences in productivity growth and technological change in terms of geographic factors and institutional choices, and (2) to analyze the institutional mechanisms by which innovators can best be rewarded for the development and dissemination of new technologies. The particular outputs we expect are: (a) guidance for national policy-makers on the relative contribution of new technologies, resource endowments and trade policies to the prosperity of rural people and national economies; (b) guidance for philanthropic and public-sector donors on appropriate funding mechanisms with which to spur innovation. These objectives and outputs are important because the development and dissemination of agricultural innovations is a principal determinant of economic conditions and social well-being, through its influence on rural incomes, resource use, and the real cost of agricultural outputs. Improved analysis allows us to identify how government policy and donor funding could most effectively create new opportunities and hence accelerate economic progress.
Project Methods
Distinct procedures and techniques are used for each of our objectives and outputs. The research using cross-country data relies on economic theory and statistical methods to identify the correlates of success. Key innovations in this include the application of spatial econometric techniques to account for spillovers and neighborhood effects, in the context of simultaneous equations to capture multiple channels of causality. Another important innovation concerns the use of new data on the tariff-equivalent magnitude of changes to agricultural product prices that are imposed by government policies around the world, using fresh estimates from a World Bank project covering about 60 countries over more than 40 years. The research on institutional mechanisms to reward innovation uses the methods of economic history to describe and analyze the interventions used in the U.S., Europe and elsewhere over the past 300 years. Also, in collaboration with Dr. Tim Cason, we are considering the use of experimental methods to construct more rigorous tests of how people respond to one kind of incentive as opposed to another, in controlled environments. Using laboratory and field experiments we can contrast alternative incentive structures, designing comparisons that reflect the major differences we see in the historical evolution of real-life institutions.

Progress 10/01/08 to 09/30/13

Outputs
OUTPUTS: Project outputs during this period focused on dissemination of findings regarding the use of proportional prizes to identify and reward relative successes in agricultural innovation and other types of socially desirable achievement. This work was presented at the African Development Bank's annual African Economic Conference in November 2009, and then published in the Journal of Public Economics in June 2010. Related work produced in this period concerns the measurement and determinants of improved child health, in a presentation at the American Dietetics Association's annual conference in October 2009 and then also in a paper published in the journal Economics and Human Biology. PARTICIPANTS: Not relevant to this project. TARGET AUDIENCES: The most prominent outreach to target audiences occurred through a one-day workshop in April 2010 at the World Bank, funded by Finance Canada and organized by the Center for Global Development, which featured extensive discussion of the potential for prize-type mechanisms including proportional payments. Details of this event are online here: http://www.cgdev.org/content/calendar/detail/1424040/ PROJECT MODIFICATIONS: This project ended on June 30, 2010 when Prof. Masters moved from Purdue University to Tufts University.

Impacts
The impact of this project lies in policymakers' awareness of how funding for agricultural innovation in Africa could be directed more effectively, for example by using proportional prize rewards paid after adoption of new technologies. This approach was featured in a paper by Kym Elliott at the Center for Global Development, and widely discussed in a conference they hosted at the World Bank in April 2010 (http://www.cgdev.org/content/calendar/detail/1424040).

Publications

  • G. Norton, J. Alwang and W.A. Masters, 2010. Economics of Agricultural Development (2nd ed.). New York: Routledge.
  • T. Cason, W.A. Masters and R. Sheremeta, 2010. Entry into Winner-Take-All and Proportional-Prize Contests: An Experimental Study. Journal of Public Economics, 94(9, October): 604-611.
  • W.A. Masters, 2010. Planting the Seeds of Africa's Growth. Project Syndicate Op-Ed Column, 26 April 2010. http://www.project-syndicate.org/commentary/masters2.
  • P. Bhagowalia, S.E. Chen and W.A. Masters, 2011. Effects and determinants of mild underweight among preschool children across countries and over time. Economics & Human Biology, 9 (1, January): 66-77.


Progress 10/01/08 to 09/30/09

Outputs
OUTPUTS: Project outputs include publication and dissemination of results from the World Bank funded project on Distortions to Agricultural Incentives, as co-editor of 1 book and co-author of 5 book chapters published in 2009. Results were presented by Prof. Masters at the opening plenary session of the Center for the Study of African Economies (CSAE), Oxford University (March 2009), at the Cornell University Institute for African Development (May 2009), at the GTAP Conference in Santiago, Chile (June 2009) and at the 27th International Conference of Agricultural Economists in Beijing, China (August 2009). In addition, the project completed publication and dissemination of the IFPRI-funded project on Accelerating Innovation in African Agriculture, with results presented at the African Development Bank's annual African Economic Conference in Addis Ababa, Ethiopia (November 2009). The project also provided analyses of the World Food Crisis of 2007-2008 at the annual conference of the American Dietetics Association in Denver (October 2009). PARTICIPANTS: As in previous years, this project was implemented by Prof. W.A. Masters, in partnership with IFPRI and the World Bank. At IFPRI, the principal collaborator has been Dr. David Spielman in Addis Ababa, Ethiopia. At the World Bank, the principal collaborator has been Dr. Kym Anderson. TARGET AUDIENCES: The target audience for this project is the community of development analysts who are occasionally consulted by policy-makers when reviewing past actions and making plans for the future. By influencing conventional wisdom about what works, how and why, we lay a foundation for more informed policy choices in the future. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.

Impacts
The main outcome of this project is increased awareness of the need for better-directed funding for agricultural innovation in Africa, and increased interest in the use of royalty-like prize rewards paid after adoption of new technologies. It is possible that the first programs of this type will attract donor support and be launched in 2010 or 2011. Further impacts are associated with understanding of government-imposed price distortions, as shown by the many citations to this project's work in that area.

Publications

  • K. Anderson and W.A. Masters (2009). Distortions to Agricultural Incentives in Africa. Washington, DC: The World Bank (618 pages).
  • W.A. Masters (2009). Review of "The Bottom Billion" by Paul Collier. American Journal of Agricultural Economics, 91(4); 1157-1159.
  • A.R. Rios, G.E. Shively and W.A. Masters (2009). "Farm Productivity and Household Market Participation: Evidence from LSMS Data." Contributed paper presented at the Conference of the International Association of Agricultural Economists, 16-22 August 2009, Beijing, China (42 pages).
  • A.R. Rios, G.E. Shively and W.A. Masters (2009). "Agricultural Prices and Income Distribution among Farmers: A Whole-Household, Multi-Country, Multi-Year Analysis." Selected paper presented at the Annual Meeting of the Agricultural and Applied Economics Association, 26-28 July 2009, Milwaukee, Wisconsin (27 pages).
  • M.J. Motamed, R.J.G. Florax and W.A. Masters (2009). "Geography and Economic Transition: Global Spatial Analysis at the Grid Cell Level." Selected paper presented at the Annual Meeting of the Agricultural and Applied Economics Association, 26-28 July 2009, Milwaukee, Wisconsin (29 pages).
  • W.A. Masters and B. Delbecq (2008). "Accelerating Innovation with Prize Rewards." IFPRI Discussion Paper 835 (December). Washington, DC: IFPRI (44 pages). http://www.ifpri.org/publication/accelerating-innovation-prize-reward s.
  • W.A. Masters (2008). "Beyond the Food Crisis: Trade, Aid and Innovation in African Agriculture." African Technology Development Forum, 5(1-2): 3-13.
  • W.A. Masters and G.E. Shively (2008). "Introduction to the Special Issue on the World Food Crisis." Agricultural Economics 39(3s): 373-374.


Progress 10/01/07 to 09/30/08

Outputs
OUTPUTS: Project outputs include: (1) Completion of the World Bank funded project on Distortions to Agricultural Incentives, as co-editor of 1 book and co-author of 5 book chapters to be published in 2009. Results were presented by Prof. Masters in meetings at FAO in Rome (December 2007), the World Bank in Washington (May 2008), and Tufts University in Boston (September 2008). Results have also been disseminated by co-authors at other conferences around the world. (2) Completion of the IFPRI-funded project on Accelerating Innovation in African Agriculture. Results were presented at a UN conference in New York (October 2007), an IFPRI conference in Addis Ababa, Ethiopia (April 2008), and will also be disseminated by IFPRI through their publications office. (3) Presentations of related work on the World Food Crisis of 2007-2008, at conferences sponsored by Columbia University in New York (September 2008) and Tufts University in Boston (September 2008). (4) Initiation of experimental-economics trials of the proportional prize mechanism, resulting so far in two papers and one NSF proposal in progress. PARTICIPANTS: This project was implemented by Prof. W.A. Masters, in partnership with IFPRI and the World Bank. At IFPRI, the principal collaborator has been Dr. David Spielman in Addis Ababa, Ethiopia. At the World Bank, the principal collaborator has been Dr. Kym Anderson. TARGET AUDIENCES: The target audience for this project is the community of development analysts who are occasionally consulted by policy-makers when reviewing past actions and making plans for the future. By influencing conventional wisdom about what works, how and why, we lay a foundation for more informed policy choices in the future. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.

Impacts
Project impacts are a continuation of the impacts cited last year. The central result is increased awareness of the need for better-directed funding for agricultural innovation in Africa, and increased interest in the use of royalty-like prize rewards paid after adoption of new technologies. Widespread interest in these ideas is shown mainly by the invitations to present them at the conferences described above as project outputs, which demonstrates strong demand for this information. The use of proportional prizes has been cited in articles by Aidan Hollis (2007), Philippe Aerni (2007) and Kym Anderson (2008), and earlier papers notably 'Climate and Scale in Economic Growth' (2001) continues to be heavily cited in the literature on international economic development. The greater level of awareness created by this project promises to inform U.S. foreign policy, to promote economic growth and stability in low-income countries.

Publications

  • Masters, W.A. (2008), Review of Global Warming and Agriculture, by William Cline, Journal of Economic Literature, 66(2, June): 448-450.
  • Bhagowalia, Priya, W.A. Masters and Susan Chen (2008), "The Distribution of Child Nutritional Status", Purdue University Department of Agricultural Economics Working Paper #08-04, April 2008, 35 pages.
  • Rios, Ana, W.A. Masters and G.E. Shively (2008), "Linkages between Market Participation and Productivity". Selected Paper for presentation at the AAEA Annual Meetings, July 2008.
  • Masters, W.A. and E. Bamou (2007), "Distortions to Agricultural Incentives in Cameroon" World Bank Agricultural Distortions Working Paper 41, December (36 pages).
  • Masters, W.A. (2007), "Distortions to Agricultural Incentives in Senegal", World Bank Agricultural Distortions Working Paper 42, December (52 pages).


Progress 10/01/06 to 09/30/07

Outputs
OUTPUTS: Project outputs for the period from October 2006 through September 2007 include a major outreach and dissemination effort, as well as the initiation of new work and continuation of on-going research projects. Dissemination and outreach was accomplished through nine invited presentations at major conferences, including particularly the following events in reverse chronological order: Incentives for Innovation in African Agriculture (AAAE conference in Accra, Ghana 8/20/07); Distortions to Agricultural Incentives in Africa (AAEA conference in Portland, OR 7/31/07); Incentives for Innovation (Jenny Lanjouw Memorial Conference at UC Berkeley, CA 3/31/07); Agricultural Productivity and Real Income (Annual Meeting of NC-1034 in Berkeley, CA 3/30/07); Distortions to Agricultural Incentives in Africa (CSAE conference in Oxford, UK 3/20/07); Trade Policy for Food and Agriculture (FAO workshop in Rome, Italy 3/1/07); Incentives for Innovation to Reduce Poverty (X Prize Foundation workshop in Los Angeles, CA 2/20/07); Distortions to Agricultural Incentives in Africa (World Bank workshop at Bellagio, Italy 11/14/06); and Rural Poverty Reduction in Nigeria (Northwestern University in Evanston, IL 11/2/06). These face-to-face presentations were complemented by the many publications listed elsewhere in this report, and led to the outcomes and impacts detailed below. PARTICIPANTS: The graduate students who have assisted with the prize rewards initiative during 2006-07 are Annie Pelletier (MS 2006) and Benoit Delbecq (a current PhD student). Both were funded through a grant from IFPRI, our partner organization, where the key contact is David Spielman in Addis Ababa, Ethiopia. TARGET AUDIENCES: The key target audiences for the prize rewards initiative are decision-makers involved in funding and administration of research, development and dissemination for new technologies, particularly for agriculture in low-income regions.

Impacts
The key impact achieved during the period from October 2006 through September 2007 was increased awareness of the need for better-directed funding for agricultural innovation in Africa, and increased interest in the use of royalty-like prize rewards paid after adoption. This funding mechanism would allow donors to pay innovators in proportion to their technologies' value to society, and thereby steer resources to the most successful partnerships and methods. Widespread interest in the prize rewards proposal is shown not only by the many invited presentations detailed above, but also by numerous citations to the idea in 2006-07. These citations include a favorable mention in the World Bank's World Development Report, as well as in journal articles by Brian Wright and Phil Pardey (2006) and Carl Pray (2007). In addition to the greater interest in prize rewards, other impacts of the project include continued heavy citation of 'Climate and Scale in Economic Growth' (2001), which Google Scholar finds cited in 13 significant papers published in 2006-07.

Publications

  • G. Norton, J. Alwang and W.A. Masters, 2006. Economics of Agricultural Development. New York: Routledge.
  • M.E. Johnson, W.A. Masters and P.V. Preckel, 2006. Diffusion and Spillover of New Technology: A Heterogeneous-Agent Model for Cassava in West Africa, Agricultural Economics, 35(2): 119-129.
  • M. Humphreys, W.A. Masters and M. Sandbu, 2006. The Role of Leadership in Democratic Deliberations: Results from a Field Experiment in Sao Tome and Principe, World Politics, 58(4): 583-622.
  • W.A. Masters, 2006. Review of Liberaliser l'Agriculture Mondiale? By J.-M.Boussard et al., European Review of Agricultural Economics, 33(3, September): 441-443.
  • G. Ngleleza, R. Florax and W.A. Masters, 2006. Geographic and Institutional Determinants of Real Income, Purdue University Department of Agricultural Economics Working Paper 06-15 (December): 34 pages.


Progress 10/01/05 to 09/30/06

Outputs
The results of this project help explain the location and speed of economic growth around the world, focusing particularly on agricultural productivity and its influence on living standards. In 2005-06, the project's principal achievements build on the publication in 2005 of an overview paper in Journal of International Affairs, entitled 'Paying for Prosperity: How and Why to Invest in Agricultural Research and Development in Africa.' This article traces the main determinants of Africa's continued poverty, and helps explain how a new approach to funding innovation would be helpful. Other important accomplishments in 2005-06 include the publication of three papers measuring the impacts of particular new technologies: one considers the regional spread of new cassava varieties across West Africa, another measures the impact of new cocoa varieties in Ghana, and a third paper addresses the interaction between new cocoa varieties, deforestation and property rights in Cameroon. Finally, 2005-06 saw significant progress towards development and implementation of new financing techniques to accelerate innovation, with numerous professional presentations building on publication in 2005 of an academic paper in International Journal of Biotechnology proposing a specific way to reward innovators proportionally to the measured impact of their technology's adoption.

Impacts
In 2005-06 this project helped influence foreign-aid donors towards renewed interest in the development and deployment of new crop varieties in Africa, as a way to combat hunger and poverty. Funding in this area had fallen sharply in the 1990s due to abundance of food elsewhere in the world. This project's contribution focuses on offering a mechanism by which donors could reward innovators proportionally to the impact of farmers' adoption of the new technologies they helped develop and disseminate, as a way to accelerate the diffusion process.

Publications

  • H. Kazianga and W.A. Masters, "Property Rights, Production Technology and Deforestation: Cocoa in Cameroon" (2006), Agricultural Economics, 35(1): 19-26.
  • J. Edwin and W.A. Masters, "Genetic Improvement and Cocoa Yields in Ghana" (2005), Experimental Agriculture, 41(4, Oct.): 491-503.


Progress 10/01/04 to 09/30/05

Outputs
The persistence of extreme poverty in Africa and elsewhere poses a serious challenge to our prosperity and security, limiting worldwide economic growth and demand for our products, and also undermining political support for the United States and its objectives. This challenge is particularly severe in agriculture, both in terms of how Africa's poverty affects the U.S., and in terms of what the U.S. could do to combat poverty. The flagship publication documenting the results of this Hatch project in 2004-05 was entitled 'Paying for Prosperity: How and Why to Invest in Agricultural R&D in Africa.' Published in the Journal of International Affairs, this work summarizes a large body of research on the role of technological innovation in poverty alleviation. Our principal conclusion from this work is the urgent need for location-specific investments in crop productivity, to offset Africa's unusually high rural population growth rates. More specific, detailed work on new incentives for innovation was published in an article entitled 'Research Prizes: A New Kind of Incentive for Innovation in African Agriculture', for the International Journal of Biotechnology. This particular line of work calls on foreign aid donors to devote some funds to awards paid proportionally to the measured social-welfare gains from new technology adoption, so as to provide a market-like incentive for researchers to pursue social gains. The prizes approach to R&D has received increasing attention over the past year, through prominent invited presentations at the annual conference of CropLife International and numerous other events. In addition, the project produced an analysis focusing particularly on tree crops in West Africa. This work, published as 'Genetic Improvement and Cocoa Yields in Ghana' for the journal Experimental Agriculture documents how much of the Ghana's recent production recovery is due to tree breeding. The apparent slowdown in productivity of older trees is in fact mainly due to their older genetics; the more recently-released tree varieties have persistently higher cocoa yields.

Impacts
The principal expected impact from work on this project in 2004-05 is the eventual deployment of a system to reward agricultural R&D institutions in Africa proportionally to the adoption and impact of the technologies they help develop and disseminate. Such a system would strengthen the agricultural research system by drawing a closer link between funding and impact, raising the effectiveness of existing investment and making additional funding more attractive to donors.

Publications

  • Masters, W.A. Genetic Improvement and Cocoa Yields in Ghana (2005), with James Edwin. Experimental Agriculture, 41(4).
  • Masters, W.A. Paying for Prosperity: How and Why to Invest in Agricultural R&D in Africa (2005), Journal of International Affairs, 58(2): 35-64.
  • Masters, W.A. Research Prizes: A New Kind of Incentive for Innovation in African Agriculture (2005), International Journal of Biotechnology 7(1/2/3): 195-211.


Progress 10/01/03 to 09/29/04

Outputs
The prosperity and security of the United States is challenged by the persistence of extreme poverty in much of Asia and Africa. In these regions, roughly one billion people live at the margin of survival, and a billion more have experienced no improvement at all in their standard of living. This poorest one-third of the world's population has little stake in the world economy - they have few opportunities for productive investment or trade, and hence have little incentive to support our economic and political system. The results of this research project help explain why some regions have been left behind by global economic growth and what can be done about it, focusing particularly on the determinants of agricultural productivity. The most important result produced in 2003-04 provides a new explanation for why developing-country governments, who impose high taxes on farm output and would benefit greatly from increased agricultural output, often invest little in R&D to raise productivity. Our analysis, published in the Review of Development Economics, explains this seemingly paradoxical behavior in terms of sequential decision-making and the technological characteristics of the relevant crops. In this view, African governments will continue to choose high tax rates and low R&D investment levels, until and unless externally-funded R&D generates more input-responsive crop varieties. Another piece of research, published in Economics of Innovation and New Technology, addresses the linkage between farmers' adoption of new varieties and the availability of new processing techniques, showing that in Nigeria although mechanical processing came first historically it was not widely used until after new cassava varieties made it worthwhile to do so. A third aspect of this project concerns the external incentives for research: an article published in AgBioForum summarizes a new approach to the funding of R&D, through which donor countries could substantially improve the targeting and effectiveness of the innovation system by awarding prizes computed after adoption occurs, rewarding innovators in proportion to the social gains from new technology. Finally, a fourth article in African Studies Quarterly analyzes the technology-adoption experience of resettled farmers in Zimbabwe, which is now one of Africa's most politically unstable countries. Taken together, progress on this project is helping to identify new ways of raising investment and trade opportunities for low-income countries, thereby contributing to a more favorable economic and political environment for the United States.

Impacts
One of the most important tools with which the U.S. can help Africa become a safer, more prosperous region is through science-based R and D for new technology, as well as science-based market institutions such as quality certification schemes for infant foods. This research shows the power of these factors to explain past outcomes, and exposes some key weaknesses of traditional approaches.

Publications

  • Johnson, M.E. and W.A. Masters, "Complementarity and Sequencing of Innovations" (2004). Economics of Innovation and New Technology, 13(1): 19-31.
  • Masters, W.A., "Research Prizes: A Mechanism to Reward Agricultural Innovation in Low-Income Regions" (2003), AgBioForum 6(1&2): 71-74.
  • McMillan, M.S. and W.A. Masters, "An African Growth Trap: Production Technology and the Time-Consistency of Agricultural Taxation, R&D and Investment" (2003). Review of Development Economics, 7(2): 179-191.
  • Chiremba, S. and W.A. Masters, "The experience of resettled farmers in Zimbabwe" (2003). African Studies Quarterly 7(2-3).


Progress 10/01/02 to 09/30/03

Outputs
Work on this project produced three major papers published in the past year. First, a pair of articles on the market for infant foods helps explain Africa's high rate of child malnutrition in terms of market failure, showing that a quality-certification system such as that maintained by the U.S. FDA could substantially reduce the cost and increase availability of high-quality infant foods. Also, a paper shows that countries seeking to stabilize food prices through purchase, storage and sale often don't succeed in actually making prices more stable, because changes in privately held stocks offset all of the changes in government stocks.

Impacts
One of the most important tools with which the U.S. can help Africa become a safer, more prosperous region is through science-based R and D for new technology, as well as science-based market institutions such as quality certification schemes for infant foods. This research shows the power of these factors to explain past outcomes, and exposes some key weaknesses of traditional approaches.

Publications

  • Masters, W.A. and D. Sanogo, 'Welfare Gains from Quality Certification of Infant Foods: Results from a Market Experiment in Mali' (2002), American Journal of Agricultural Economics, 84(4): 974-989.
  • Sanogo, D. and W.A. Masters, 'A Market-Based Approach to Child Nutrition: Mothers' Demand for Quality Certification of Infant Foods in Bamako, Mali' (2002), Food Policy, 27(3): 251-268.
  • Martinez, E., G.E. Shively and W.A. Masters, 'Testing the Link between Public Intervention and Food Price Variability: Evidence from Rice Markets in the Philippines' (2002), Pacific Economic Review, 7(3): 545-554.


Progress 10/01/01 to 09/30/02

Outputs
This research asks how climate and other biophysical factors affect our economic and social environment, leading to new prescriptions for international agricultural policy. This year's publication helps to explain why African governments so often impose counter-productive policies on themselves, in the sense that lower tax rates and higher public investment in agriculture would actually raise all the revenues available to governments. We find that high taxes and low public investment can be explained in part by the time delay in production response associated with tree crops such as cocoa. This long time delay makes it impossible for governments to sustain a credible promise of low taxes and high public investment over time. In contrast, for annual crops without such a time delay, farmers know they can retaliate quickly against bad government policies, so governments do maintain lower taxes and more investment.

Impacts
This research tells us that direct attempts to influence African governments are unlikely to succeed. Even if policies improve, governments are likely to revert to counter-productive policies in the future. To sustain improved policies, it would be better to use R&D to generate new production techniques, and thereby create a sustained increase in African farmers' bargaining power vis-a-vis their own governments.

Publications

  • No publications reported this period


Progress 10/01/00 to 09/30/01

Outputs
Our analysis has focused on the role of climate and other biophysical factors in our economic and social environment. We used new data on climate history to test whether climate has influenced economic growth, isolating the particularly important role of "hard" winter frosts in helping people control insects and micro-organisms that carry disease and limit agricultural productivity. We also test how biophysical factors affect the payoff to different kinds of investment and influence government policy choices, and ask how the US can help African governments get around their problems, to promote a more prosperous and secure world environment.

Impacts
Our research quantifies the links between government policy, agricultural technology, and economic development, permitting more successful targeting of public investment. One particularly high-impact finding is that winter frost has been an important factor promoting economic development. This idea has attracted substantial media attention, and could help focus investment on R&D for the new technologies needed to improve public health and agriculture in Africa and in other tropical regions that do not benefit from winter frost.

Publications

  • Masters, W.A. and M.S. McMillan, 2001. "Climate and Scale in Economic Growth", Journal of Economic Growth, 6(3, Sept.): 167-186..


Progress 10/01/99 to 09/30/00

Outputs
Analysis of bilateral trading agreements between the EU and South Africa found high costs to the rest of Africa, due to trade diversion effects. These findings were published in a prominent French professional journal, and should draw further attention in Europe to the importance of multilateral agreements that include all major trading partners. Analysis of Africa's own policies found that lower trade taxes are unlikely unless governments can make credible commitments to maintain those low tax rates into the future. Democracy and regular elections must be accompanied by strong constitutions and other conditions for stable government. This work was published in the American Journal of Agricultural Economics, to reach policy analysts around the world. Analysis of farm-level changes found that crop-livestock intensification is proceeding rapidly in West Africa, based on reduced use of common pastures and increased use of confinement feeding. An article on this was published in Society and Natural Resources.

Impacts
This project demonstrates the power of economic analysis in explaining why Africa is so poor, and has so little international trade or investment. In 1999, our publications focused attention on how European policy in Africa affects the rest of the world, and also on how foreign aid could best promote effective reform of Africa's own policies.

Publications

  • Fisher, M.G., R. Warner and W.A. Masters, 'Gender and Agricultural Change: Crop-Livestock Interaction in Senegal,' Society and Natural Resources, 13(3):203-222, 2000.
  • Masters, W.A. and M.S. McMillan, 'Understanding the Political Economy of Agriculture in the Tropics', with Margaret S. McMillan, Amer. Journal of Agricultural Economics, 82(Aug.): 738-42, 2000.
  • Masters, W.A., R. Davies and T. Hertel, 'L'Europe, L'Afrique du Sud, et l'Afrique Australe: Integration Regionale dans un Contexte Mondial', Revue d'Economie du Developpement, 2000/3: 113-134, 2000.


Progress 10/01/98 to 09/30/99

Outputs
During this first year of work the project made initial findings in each area of work. Using economy-wide analyses we found that the 1999 trade agreement between the EU and South Africa is likely to have significantly negative effects on third parties, furthering the case for more comprehensive trade reforms as in the WTO. Using market-level analyses, we found evidence for the key role of quality certification in permitting trade in processed foods, particularly in foods for infants to help combat malnutrition. Finally, using farm-level analyses we were able to explain the slow spread of new cassava varieties in West Africa, documenting the need for different types of research and for innovations in cassava processing.

Impacts
After a year of work the project has achieved some impact in documenting key influences on African economic development and its trade with the U.S. Projects in each of the three focus areas have received international attention, including financial support from outside institutions notably the British foreign aid agency (for objective 1), USAID (for objective 2) and IFPRI (for objective 3).

Publications

  • Hertel, T.W., W.A. Masters and M.J. Gehlhar, 1999. "Regionalism in World Food Markets: Implications for Trade and Welfare", in Food Security, Diversification and Resource Management: Refocusing the Role of Agriculture, edited by G.H. Peters and D.D. Hedley. Aldershot, UK: Dartmouth.
  • Dalton, T.J. and W.A. Masters, 1998. "Pasture Taxes and Agricultural Intensification in Southern Mali" Agricultural Economics, 19(1-2): 27-32.
  • Masters, W.A., T. Bedingar and J.F. Oehmke, 1998. "The Impact of Agricultural Research in Africa: Aggregate and Case Study Evidence", Agricultural Economics, 19(1-2): 81-86.
  • Hertel, T.W., W.A. Masters and Aziz Elbehri, 1998. "The Uruguay Round and Africa: A Global, General Equilibrium Analysis" Journal of African Economies 7(2): 208-234.
  • Masters, W.A. and E. Ianchovichina, 1998. "Measuring Exchange Rate Misalignment: Inflation Differentials and Domestic Relative Prices", World Development 26(3): 465-77.
  • Masters, W.A. and T. Bedingar, 1999. "The Impact of Agricultural Research: A Synthesis of Findings and Policy Implications for the Sahel". Les Monographies Saheliennes No. 9 (Institut du Sahel, Bamako, Mali), 36 pages.
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