Economic policy and investment in rural public goods: a political economy perspective

Focuses on the interdependence between countries' agricultural and foreign trade policy and their ability and commitment to increase the productivity of resources in agriculture. Governments in less-developed countries typically play a pervasive role in their economies. This role may be warranted in agriculture for those cases where markets fail to provide socially optimal levels of agricultural technology, rural infrastructure, education, information, and other services that lower market transaction costs and increase the productivity of land and labor. However, the amelioration of market failure is hampered in less-developed countries for many of the same reasons that cause markets to fail. We focus on the direct and then the indirect effects of intervention in agriculture in the first section. The second section focuses on the political economy of economic policy. In the third section we turn our attention to the nature of public investment in agricultural research. We present quantitative evidence on the structure of public support for agricultural research and place that evidence in the political economy context developed in the prior sections of the chapter. -from Authors