Abstract
This paper formalizes and demonstrates how transport infrastructure between rural areas helps Third World countries deal with crop failures. In developed economies where transport costs are negligible, a crop failure in one area enhances market opportunities for producers in other growing regions. In developing countries where transport costs can be prohibitive, a crop failure in one area can have the reverse effects on other growing regions—undermining market opportunities—especially where crops must be transported through a central market to which food aid is delivered. We analyze the impacts of crop failures and food aid in a Walrasian general equilibrium model of a small, open, three-region economy, stylized to mimic African countries with prohibitively high costs of transport between rural regions.
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Presented in honor of Gordon Mulligan at the 2010 annual meetings of the Western Regional Science Association, Sedona, AZ, February 2010. The authors are very grateful to Gordon Mulligan for having helped introduce us to each other over 15 years ago, having encouraged us in our research to elaborate new economic geography models to provide insights about rural development (as opposed to urban concentration alone), having edited and helped to publish our research as well as promoting it for an award for scholarship. Without Gordon, who knows if we’d be addressing these fundamental problems today? Thank you, Gordon Mulligan!.