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Grain transport and rural credit in Mozambique: solving the space–time problem
Author(s) -
Arndt Channing,
Schiller Rico,
Tarp Finn
Publication year - 2000
Publication title -
agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.29
H-Index - 82
eISSN - 1574-0862
pISSN - 0169-5150
DOI - 10.1111/j.1574-0862.2001.tb00235.x
Subject(s) - complementarity (molecular biology) , welfare , bond market , space (punctuation) , economics , interest rate , natural resource economics , business , agricultural economics , microeconomics , monetary economics , market economy , computer science , genetics , biology , operating system
This paper shows how credit market failures can lead to large welfare losses in grain markets by inducing increased transport for seasonal storage in locations with low credit costs. The burden of these welfare losses falls primarily on rural households. These conclusions are obtained from a spatial/temporal model solved using a mixed complementarity formulation that easily handles interest rate differentials across space. Efforts to address credit market failures and to improve the efficiency of rural storage should be given priority as opposed to the creation of large, formal sector grain collection centers.