Multinational supermarket chains in developing countries: Does local agriculture benefit?

  • Stokke H
  • 37

    Readers

    Mendeley users who have this article in their library.
  • 4

    Citations

    Citations of this article.

Abstract

There is no consensus in the empirical literature on how entry of multinational supermarket chains affects farmers in developing countries. Econometric analyses struggle with causality issues and are unclear about the channel of effects. We quantify the dynamic effects of supermarket expansion on agriculture within a structural framework that clarifies the adjustment mechanisms involved. The model specification allows for endogenous interaction between agricultural productivity and supermarkets' choice of suppliers. Based on numerical simulations, two results emerge. First, we offer a possible interpretation of the conflicting evidence in the empirical literature. Whether farmers benefit from supermarkets or get stuck in a low productivity trap depends on the extent of local constraints related to production capacity and market access. Second, supply chain development initiated by supermarkets can help farmers escape the low productivity trap. While supermarkets face a short-run cost to supplier upgrading, they gradually gain from more productive local suppliers. 2009 International Association of Agricultural Economists.

Author-supplied keywords

  • Backward productivity spillovers
  • Intertemporal general equilibrium model
  • Local constraints
  • Supply chain development

Get free article suggestions today

Mendeley saves you time finding and organizing research

Sign up here
Already have an account ?Sign in

Find this document

Authors

  • Hildegunn E. Stokke

Cite this document

Choose a citation style from the tabs below

Save time finding and organizing research with Mendeley

Sign up for free