Abstract

This paper addresses an old and recurring theme in development economics: the slow adoption of new technologies by farmers in many developing countries. The paper explores a somewhat novel link to explain this puzzle -- the link between market access and the incentives to adopt a new technology when there are non-convexities. The paper develops a theoretical model to guide the empirical analysis, which uses spatially disaggregated agricultural production data from Spatial Production Allocation Model and Living Standards Measurement Study survey data for Nigeria. The model is used to estimate the impact of transport costs on crop production, the adoption of modern technologies, and the differential impact on returns of modern versus traditional farmers. To overcome the limitation of data availability on travel costs for much of Africa, road survey data are combined with geographic information road network data to generate the most thorough and accurate road network available. With these data and the Highway Development Management Model, minimum travel costs from each location to the market are computed. Consistent with the theory, analysis finds that transportation costs are critical in determining technology choices, with a greater responsiveness among farmers who adopt modern technologies, and at times a perverse (negative) response to lower transport costs among those who employ more traditional techniques. In sum, the paper presents compelling evidence that the constraints to the adoption of modern technologies and access to markets are interconnected, and so should be targeted jointly. Document type: Book

Abstract

This is the first report presenting the Logistics Performance Index (LPI) and indicators. It aims to shed light on how different countries are doing in the area of trade logistics, and what they can do to improve their performance. It is based on a worldwide survey of the global freight forwarders and express carriers who are the most active in international trade. LPI and its underlying indicators constitute a unique dataset to measure country performance across several dimensions of logistics and to benchmark that logistics performance against 150 countries. It provides the empirical basis to understand and compare differences in trade logistics as well as to inform policy with respect to difficult bottlenecks and tradeoffs. As a tool for policymakers, professionals, development agencies, and other stakeholders, it will directly support the fast-growing agenda for reforms and investments in trade and transport facilitation. The report provides some insights on the cost of poor logistics to country competitiveness and the sources of those higher costs. Beyond cost and time taken to deliver goods, the predictability and reliability of supply chains is increasingly important in a world of just-in-time production sharing. Costs related to hedging against uncertainty are significant. Equally, cost and quality of logistics are determined not just by infrastructure and the performance of public agencies, but also by the availability of quality and competitive private services. Moreover, in many developing countries, problems of adverse geography are compounded by a weak modern services sector due to poor institutions or over-regulation. The report closes with some practical insights, advocating a comprehensive, integrated approach to ensure that actions in one area are not rendered ineffective by bottlenecks in another.