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Tuesday, April 13th 2021

Obie Porteous (Middlebury College) will present Reverse Dutch Disease with Trade Costs: Prospects for Agriculture in Africa’s Oil-Rich Economies.

Abstract:

Low world oil prices since 2014 are stimulating tradable sectors in oil-exporting countries. I use a three-location open economy model to investigate the prospects for reverse Dutch disease in African countries with a comparative advantage in agriculture but large internal and external trade costs. While falling resource revenues lead factors of production to shift into agriculture, remote farmers can lose when trade costs make agricultural goods behave like non-tradables. Household survey data from Nigeria show a significant agricultural supply response that is correlated with exposure to international markets. Lowering trade costs and boosting agricultural productivity can help offset the lost income from oil.”