Agro-exports and the rural resource poor in Latin America : policy options for achieving broadly based growth

Abstract

Concentrating on fundamental sector-level impacts that shape the nature of agro-export growth, this paper indicates how intrahousehold impacts fit into the analysis. Section 1 is introductory. Section 2 puts forward the conceptual framework needed to understand sectoral impacts of agro-export growth on the rural resource poor, impacts that can be divided into a small-farm adoption effect, a land-access effect, and a labor-absorption effect, all of which are interlinked. Section 3 explores the economic forces that shape the magnitude of the direct (adoption and land access) and indirect (labor absorption) effects of agro-export growth. Its chief message is that the agronomic and economic characteristics of agro-export crops interact with the intrinsic imperfections of rural factor markets to create farm-size biases-biases that are frequently tilted against small farm production. Section 4 summarizes the coordinated empirical, farm-level research on agro-export booms in Chile, Guatemala, and Paraguay. Section 5 analyzes the range of policy available to foment broadly based growth. In order of increasing policy activism, policies are divided into those that (1) get prices and institutions "right," (2) pick winners for public investment, (3) reform land markets, and (4) reform information-constrained markets. Section 5 argues that capital and insurance market reforms will almost always be necessary if agro-export growth is to be broadly based. Section 6 closes the paper with a brief reflection on the desirability of promoting broadly based growth: Is pursuit of broadly based growth worth it given the likely complexity of the recommended factor market interventions? While this is a highly complex and value-laden question, section 6 suggests perspectives from both the U.S. domestic and low-income country policy contexts that make broadly based growth a goal worth pursuing.