The Economics of Rural Infrastructure

In many countries of sub-Saharan Africa, there are large tracts of arable land with significant agricultural potential. Unfortunately, much of this land is located in remote areas that lack access to major markets, so this enormous agronomic potential remains untapped.

In Road connectivity, population, and crop production in Sub-Saharan Africa IFPRI researchers Paul Dorosh, Emily Schmidt, and Liangzhi You and World Bank researcher Hyoung Gun Wang investigate the potential for improved infrastructure in rural sub-Saharan Africa to remove this market constraint and lead to increased crop production.

Photo by IFPRI

Using geographic information system (GIS) data sets to determine the links between “population, agricultural production, and travel time to large cities (100,000 people or more)” Dorosh et al. found that less than 10 percent of agricultural production takes place in areas from which travel time to large markets exceeds 4 hours. Moreover, only 5% of the potential land in remote areas was being used for agricultural production as compared to 45% near large cities/markets. These findings suggest that “improving access to road infrastructure and large markets could facilitate a substantial increase in agricultural production.” Furthermore, this increase in agriculture could “have a significant impact on rural and national incomes.”

Seems like a simple equation, doesn’t it? Improved access to markets offers the potential to increase agricultural output and generate incomes that benefit the farmer and the nation as a whole. But simple solutions are rarely reliable when addressing complicated issues.

Yes, roads can mean market access. Yes, they could open channels for extension services to provide advanced training and inroads for new technologies. Yes, roads connect households to larger cities and the potential for new livelihoods. But who is going to pay for this rural infrastructure?

Ultimately roads cost money, and unfortunately, as the researchers found, “while reductions in travel time … could lead to large increases in output, the costs of the investments in rural roads are [so great] that gains in agriculture production alone are likely not sufficient to justify the major expenditures that would be required.”

So while research shows a correlation between production and proximity to markets, high transportation costs remain a major obstacle in granting market access to remote areas. Dorosh et. al also stipulate that improved roads “will not reduce transport and marketing costs in the short run,” and caution that other factors  including the structure of agricultural and transport service markets, investments in agricultural seed systems and extension, and availability of credit should also be taken into account.

In the end, while building rural infrastructure would increase market access for remote farmers and open up opportunities for new investments, it is not the proverbial silver bullet.

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About josheard

Josh Heard is an actor in Washington, DC.
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