Liberalization with Endogenous Institutions: A Comparative Analysis of Agricultural Reform in Africa, Asia and Europe

Thirty years ago, a vast share of the poor and the middle income countries were heavily state-controlled. The effects of the liberalizations in the 1980s and 1990s differed strongly between regions in Africa, Asia and Europe. This paper compares the relative reform performance across Asia, Africa and Europe, using a series of indicators to compare changes in output and productivity during the reform period, with respect to agriculture. The paper shows a model which analyzes how liberalization affects the production and income distribution when liberalization affects the institutions that govern production and exchange. The model helps to derive hypothesis on how the endogenous institutional adjustments affect the supply response to the liberalizations. These insights are related to the empirical observations on agricultural performance and variations in commodity chain performance across countries. [LICOS DP no.233/2009]