Market Access, Trade Costs, and Technology Adoption: Evidence from Northern Tanzania

Aggarwal, S and Giera, B and Jeong, D and Robinson, J and Spearot, A (2018) Market Access, Trade Costs, and Technology Adoption: Evidence from Northern Tanzania. Working Paper. NBER. (Unpublished)

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Abstract

In this paper, we quantify market access in rural Tanzania, and the extent to which it constrains agricultural productivity. We collect granular data on farmer input and sales decisions, input and output prices, and travel costs in all 1,183 villages in two regions of Tanzania. We find that a village in the 90th percentile of the travel-cost adjusted price distribution faces input and output prices 40-55% less favorable than a village at the 10th percentile. In reduced form, an additional standard deviation of travel time is associated with 20-25% lower input adoption and output sales. We develop and quantify a spatial model of input adoption and conservatively estimate that farmers behave as if they face travel costs of 6% ad-valorem per kilometer of travel, which is equivalent to 40% when traveling to the closest retailer. Holding exogenous local factors fixed, we estimate that reducing travel costs by 50% (approximately the effect of paving rural roads) doubles adoption and reduces the adoption-remoteness gradient by 18%.

Affiliation: Indian School of Business
ISB Creators:
ISB CreatorsORCiD
Aggarwal, SUNSPECIFIED
Item Type: Monograph (Working Paper)
Uncontrolled Keywords: Market Access,Trade Costs,Technology Adoption
Subjects: Economics
Depositing User: Veeramani R
Date Deposited: 24 Apr 2019 13:30
Last Modified: 24 Apr 2019 13:30
URI: http://eprints.exchange.isb.edu/id/eprint/882
Publisher URL: http://dx.doi.org/10.3386/w25253
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