Market Opportunities for African Agriculture: A General Equilibrium Examination of Demand-side Constraints on Agricultural Growth in East and Southern Africa

Xinshen Diao · Paul Anthony Dorosh · Shaikh Mahfuzur Rahman

Jan 2007 · Research report (International Food Policy Research Institute) Ibhuku elingu-154 · Intl Food Policy Res Inst

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How can East and Southern African nations reduce poverty and hunger through agricultural growth? How can they create sufficient market demand to power such growth? This report proposes answers to these questions, applying a general equilibrium framework to the experiences of Madagascar, Malawi, Mozambique, Tanzania, Uganda, Zambia, and Zimbabwe. The authors conclude that, for countries like these, promoting traditional agricultural exports, developing nontraditional exports, and increasing food staple growth will probably not be sufficient to generate a significant level of economic growth. Instead, the model simulations suggest that reductions in marketing costs through improved infrastructure and development of market institutions, along with significant growth in the nonagricultural economy (besides that generated by agricultural growth linkages) are necessary conditions for rapid economic growth. This report's findings are a valuable first step toward understanding how East and Southern African nations can achieve economywide growth and poverty reduction.