År: 2016
Projektledare: Konrad Burchardi
Medsökande: Ingvild Almås, Timo Boppart, Hannes Malmberg
Anslagsförvaltare: Stockholms universitet
Område: Ekonomi
Belopp: 6 356 307 kr
Vår forskning
Inkomstklyftorna mellan rika och fattiga länder är mycket stora. Sverige är nästan 10 gånger så rikt som Vietnam och mer än 30 gånger så rikt som Etiopien. Två av nationalekonomins äldsta och svåraste frågor är varför dessa skillnader har uppstått, och varför de består. Rådande makroekonomiska modeller har inte fullt ut lyckats förklara ekonomisk utveckling. Ett möjligt problem med dessa modeller är att de antar att marknader är välfungerande och integrerade även i låginkomstländer. Mycket tyder nämligen på att detta inte stämmer. I låginkomstländer är många bönder självhushållande och varupriser varierar mycket mellan regioner – båda dessa faktorer är tecken på bristande marknadsintegrering.
Forskningsprojektet undersöker teoretiskt och empiriskt hur denna bristande integrering kan begränsa ekonomisk utveckling. Teoretiskt visar vi hur integrerade marknader är viktiga eftersom de möjliggör storskalig produktion och specialisering. Empiriskt utför vi enkätundersökningar för att kunna mäta hur integrerade marknader är i olika länder. Vi använder empirin för att dokumentera mönster och för att testa och utveckla teorier.
Projektets resultat har potentiellt stor praktisk betydelse. Om ökad marknadsintegrering är central för utveckling bör beslutsfattare prioritera att stärka inhemska marknaders funktion. Projektets slutsatser kan därför stödja utformandet av effektiv utvecklingspolitik på nationell och internationell nivå.
Research
Macroeconomic theories of development are built on the assumption of integrated domestic markets. In particular, standard theories assume that domestic markets in both rich and poor countries allow economic actors to buy and sell large amounts of goods, labor, capital and land at known prices. These integrated markets allow for extensive specialization and trade between different households, enterprises, villages, and regions.
The strong assumptions about integrated markets are in stark contrast with the evidence provided by recent microeconomic studies. This body of work highlights that poorly integrated markets are hallmarks of the early stages of economic development. Households and enterprises in developing countries have limited information about market demand and face high barriers to market access (Bryan et. al., 2014). Lack of market integration in turn translates into high spatial price dispersion, high price volatility and – maybe most importantly -– limited specialization (Jensen, 2007; Banerjee and Duflo, 2007). Many poor households are primarily subsistence farmers with little or no contact with the market. Households are at most integrated in village economies, which are themselves only partly integrated in the wider economy. Data from Uganda suggests that 58% of rural households are subsistence households, and this figure is 80% in some remote regions of the country (Uganda, 2006).
The limited attention paid to market integration also constitutes a major discrepancy between current macroeconomic theories of development and the work of economic historians. In economic history, the gradual movement of households from low productivity subsistence work to high productivity specialized units is often viewed as a central characteristic of economic development (Mendels, 1973). The division of labor which allows for specialization is in turn deeply connected to market integration. This link is still best expressed in its original form by Adam Smith. In The Wealth of Nations, he noted that the degree of specialization depends on the extent of the market, as specialized production requires a large market to absorb its output. Smith writes about the Scottish Highlands, a poor economy of his time, that:
“In the lone houses and very small villages which are scattered about in so desert a country as the Highlands of Scotland, every farmer must be butcher, baker and brewer for his own family.” (Smith, 1776)
We believe that Adam Smith’s basic insight is still relevant for many parts of the world. Recognizing the role of market integration and specialization remains key to understanding the process of economic development. In our view, both the Highlands of Scotland in the 18th century and developing countries today lack well integrated markets, and we believe that modern economic growth theory needs to reflect this fact. Our project seeks to understand market integration and its effect on the process of economic development, using modern theoretical and empirical tools.
