Spatial integration, agricultural productivity, and development: A quantitative analysis of Ethiopia’s road expansion program

While Ethiopia has been a pre-dominantly agricultural-based economy, productivity in agriculture has been low relative to the rest of the economy, not having changed much since the 1960s. These characteristics are shared by many other developing economies. Agricultural productivity growth is important for Ethiopia’s economic development, its structural transformation, and its poverty reduction efforts.

This research project will investigate quantitatively the role of transportation costs and market access opportunities of farmers for agricultural productivity growth. Until recently Ethiopia had among the lowest transportation infrastructure densities and lowest motor vehicle usage in the world. This had resulted in high average transport costs and in entire rural communities being isolated from crop and input markets. 83.7% of areas were located further than 2 km from an all-weather road. In addition, there was considerable dispersion in transportation costs faced by farmers not only across locations but also within narrow geographic areas. This had resulted in considerable variation in market access opportunities across farmers.

The goal of this research project is to measure the effect of improvements in market access opportunities on agricultural productivity using a quantitative spatial macro model and micro-level data from Ethiopia.