It’s (also) what you produce: Experimental Evidence on Creating Markets for Quality in Low-income Countries

Introduction

Half of the world's extreme poor – or over 430 million people – live in Sub-Saharan Africa. The vast majority live in rural areas and work in agriculture, where productivity is desperately low. This keeps welfare low now – and in the future – as agricultural productivity increases are seen as a condition for both structural transformation and to avoid the worst impacts of climate change.

Motivation for the Green Revolution

This is the motivation for bringing the green revolution – which has so far bypassed the continent – to Sub-Saharan Africa. Despite the logic being compelling, the results from a decade of research on technology adoption in African agriculture have been largely disappointing.

Challenges in Agricultural Interventions

Interventions aimed at increasing farmers' ability to invest in inputs to produce more of what they already do have not proven transformative. In this research proposal, I will investigate a complementary explanation for why income and productivity in African agriculture remain low:

1. It is what farmers produce – precisely the quality and value added of their output – that keeps them poor.
2. They produce low quality because there is no demand for smallholders to produce high quality or higher value-added outputs.

As low quality limits price and thus farmers' potential income, missing markets for quality can help explain the low returns to farming.

Hypothesis and Research Approach

At the core of this research proposal is the hypothesis that markets for quality are missing because of a fundamental information problem: quality is a difficult characteristic to observe.

I will rely on three multi-wave randomized controlled field trials to study technological and institutional solutions to overcome this information problem, which hampers demand for high quality products in the export market (work package I) and at home (work package II).

Conclusion

In the final work package, I will complete the cycle and study how increases in demand for high quality outputs, and access to high quality inputs, can jump-start a green revolution in rural Africa.