Anderson, KymBrückner, Markus2013-01-022013-01-022012-09https://hdl.handle.net/10986/12059To what extent has Sub-Saharan Africa's slow economic growth over the past five decades been due to price and trade policies that discouraged production of agricultural relative to non-agricultural tradables? This paper uses a new set of estimates of policy induced distortions to relative agricultural prices to address this question econometrically. First, the authors test if these policy distortions respond to economic growth, using rainfall and international commodity price shocks as instrumental variables. They find that on impact there is no significant response of relative agricultural price distortions to changes in real GDP per capita growth. Then, the authors test the reverse proposition and find a statistically significant and sizable negative effect of relative agricultural price distortions on the growth rate of Sub-Saharan African countries. The fixed effects estimates yield that, during the 1960-2005 period, a ten percentage points increase in distortions to relative agricultural prices decreased the region's real GDP per capita growth rate by about half a percentage point per annum.en-USCC BY 3.0 IGOABSOLUTE TERMSABSOLUTE VALUEADJUSTMENT COSTSAGRICULTURAL GROWTHAGRICULTURAL OUTPUTAGRICULTURAL PRICEAGRICULTURAL PRICESAGRICULTURAL PRODUCTIONAGRICULTURAL SECTORAGRICULTURAL TRADEAGRICULTUREAVERAGE INCOMEAVERAGE INCOMESAVERAGE SHAREBIDDINGBONDBUSINESS CYCLECAPITAL ACCUMULATIONCAPITAL STOCKCIVIL WARCOMMODITIESCOMMODITYCOMMODITY EXPORTCOMMODITY EXPORTSCOMMODITY PRICECOMMODITY PRICESCONSUMERSCONSUMPTION GROWTHCOUNTRY CASECOUNTRY FIXED EFFECTSCOUNTRY LEVELCOUNTRY SPECIFICCROSS-COUNTRY DIFFERENCESDATA MODELDATA SETDEPENDENT VARIABLEDESCRIPTIVE STATISTICSDEVELOPING COUNTRIESDEVELOPING COUNTRYDEVELOPMENT ASSISTANCEDEVELOPMENT ECONOMICSDEVELOPMENT INDICATORSDEVELOPMENT POLICYDEVELOPMENT RESEARCHDOWNWARD BIASDYNAMIC PANELECONOMETRIC MODELECONOMETRIC MODELSECONOMETRICSECONOMIC ACTIVITYECONOMIC DEVELOPMENTECONOMIC GROWTHECONOMIC POLICYECONOMIC REFORMECONOMIC REVIEWECONOMICS LITERATUREEMPIRICAL ANALYSISEMPIRICAL EVIDENCEEMPIRICAL LITERATUREEMPIRICAL RESULTSEMPIRICAL SUPPORTERROR TERMESTIMATED COEFFICIENTESTIMATED COEFFICIENTSESTIMATION TECHNIQUESEXCHANGE RATEEXOGENOUS CHANGESEXPENDITUREEXPLANATORY VARIABLEEXPORT TAXESEXPORTSEXTERNALITIESFINANCIAL SUPPORTFIXED CAPITALFIXED EFFECTSFIXED EFFECTS ESTIMATIONFOREIGN EXCHANGEFREE MARKETFUNCTIONAL FORMGDP PER CAPITAGENERAL EQUILIBRIUM ANALYSISGLOBALIZATIONGOVERNMENT EXPENDITURESGROWTH DATAGROWTH DYNAMICSGROWTH EFFECTGROWTH LITERATUREGROWTH PERFORMANCEGROWTH RATEGROWTH RATESGROWTH REGRESSIONSIMPERFECT COMPETITIONIMPORT TARIFFSINDUSTRIALIZATIONINEQUALITYINTERNATIONAL COMPARISONSINTERNATIONAL MARKETINTERNATIONAL TRADELABOR FORCELONG-RUN GROWTHMACROECONOMICSMARGINAL EFFECTMARKET EQUILIBRIUMMINIMUM LEVELNATURAL RESOURCENEGATIVE COEFFICIENTNEGATIVE EFFECTNEGATIVE GROWTH0 HYPOTHESISOUTPUT GROWTHOVERVALUED EXCHANGEOVERVALUED EXCHANGE RATESPANEL REGRESSIONSPER CAPITA GROWTHPER CAPITA GROWTH RATEPOLICY DISCUSSIONSPOLICY REFORMPOLICY RESEARCHPOLITICAL ECONOMYPOLITICAL INSTITUTIONSPOLITICAL REGIMEPOSITIVE COEFFICIENTPOSITIVE EFFECTPOSITIVE GROWTHPOVERTY REDUCTIONPRICE DISTORTIONSPRICE INDEXPRICE INDICESPRICE POLICIESPRIMARY PRODUCTSPRIVATE CONSUMPTIONPRODUCER PRICESPRODUCTIVITY GROWTHREAL GDPREAL INCOMERELATIVE CONTRIBUTIONSRELATIVE PRICESSERIAL CORRELATIONSERIES DATASHORT-RUN GROWTHSIGNIFICANCE LEVELSIGNIFICANT EFFECTSIGNIFICANT IMPACTSIGNIFICANT NEGATIVESIGNIFICANT REDUCTIONSSTANDARD DEVIATIONSTRUCTURAL CHANGESUPPLY CHAINTAXTAXATIONTRADABLE SECTORSTRADE LIBERALIZATIONTRADE OPENNESSTRADE POLICIESTRADE POLICYTRADE TAXESUNDISTORTED PRICESUNEMPLOYMENTURBANIZATIONVALUE ADDEDWORLD DEVELOPMENT INDICATORSWORLD ECONOMYWORLD TRADEWORLD TRADE ORGANIZATIONWTOWorld Bank10.1596/1813-9450-6206