Design Effective Agricultural Liberalization: An Analysis of Peasants, Their Markets and Supply Response in Madagascar

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9312615 Carter Agricultural liberalization in Madagascar has had disappointing results: agricultural production per capita has declined since reforms began. This dissertation research project will attempt to explain in microeconomic terms the fallacies in the logic of liberalization which have produced these unexpected outcomes. The candidate, Christopher B. Barrett, working under the supervision of Prof. Michael R. Carter, of the Department of Agricultural Economics, of the University of Wisconsin - Madison, will collect market-structure data on ten villages in one of Madagascar's principal agricultural regions, the Vakinankaratra area of the Central Highlands. The cooperating Malagasy institution, the Centre d'Etudes Economiques of the Universite d'Antananarivo, under the direction of Dr. Pepe Andrianomanana, will assist in identifying informants. These data will be analyzed in conjunction with existing data already gathered from a variety of sources, including an 825-household Malagasy farm management study fielded in 1990. The researcher will use the data to test a microeconomic theory of peasant response to risk in an imperfect market environment. The conventional, reductionist approach, which identifies prices as levels and represents markets by price levels alone, predicts relatively uniform producer response across households. The proposed approach would add three intuitive insights to the conventional model: that prices are distributions, that markets are not uniform in the way they transmit price signals, and that farm-level, non-price constraints bind differentially across producers and commodities. The potential practical benefit would be a new perspective that could improve the design of agricultural liberalization programs. ***