Abstract
AbstractThis article documents the long‐term welfare effects of household nontraditional agricultural export (NTX) adoption. We use a panel dataset that spans the period 1985–2005, and employ difference‐in‐differences estimation to investigate the long‐term impact of nontraditional agricultural export adoption on changes in household consumption status and asset position in the Central Highlands of Guatemala. Given the heterogeneity in adoption patterns, the analysis differentiates the impact estimates based on a classification of households that takes into account the timing and duration of nontraditional agricultural export adoption. The results show that while, on average, welfare levels have improved for all households irrespective of adoption status and duration, the extent of improvement has varied across groups. Long‐term adopters exhibit the smallest increase in the lapse of two decades, in spite of some early gains. Conversely, early adopters who withdrew from nontraditional agricultural export production after reaping the benefits of the boom period of the 1980s are found to have fared better and shown greater improvements in durable asset position and housing conditions than any other category.
Highlights
Agricultural growth can be more effective in poverty alleviation compared to growth in secondary and tertiary sources of GDP (Ravallion and Chen, 2004) and especially beneficial for the poorest households (Ligon and Sadoulet, 2007)
Throughout the 1990s, a wide range of agronomic, market-based, and institutional problems led to a significant drop in the profitability of snow pea production and caused a sizeable number of smaller and resource-poor farmers to withdraw from export crop production
We explore the heterogeneity of impact based on a classification of households that takes into account the timing and duration of snow pea adoption
Summary
Agricultural growth can be more effective in poverty alleviation compared to growth in secondary and tertiary sources of GDP (Ravallion and Chen, 2004) and especially beneficial for the poorest households (Ligon and Sadoulet, 2007). Saenz de Tejada’s (2002) qualitative work in Santiago and Pacul indicates that while some export crop producers accumulated more land with NTX earnings, others used their savings to improve housing conditions and purchase livestock and durable goods, including pick-up trucks Her findings uncover nostalgia for the boom period and the smallholder view that the best approach to snow pea cultivation was to adopt early, grow intensively, and invest the returns in ways that would allow for withdrawal as the profitability plummeted.. On the other hand, Hamilton and Fischer (2003; 2005) demonstrate positive local perceptions of economic and social change subsequent to the diffusion of non-traditional export crops through qualitative studies of small-scale NTX farmers in Chimaltenango Their arguments, are largely based on answers given to a subjective set of questions concerning the overall changes in the economic situation, educational attainment, nutrition and health-care of the surveyed families, regardless of their NTX adoption status, throughout the last fifteen-to-twenty year period of NTX production in the communities. The 1985 value of the index is calculated from the 2005 survey, based on the recall data on asset ownership 20 years ago. 28 Modern kitchen is defined a dwelling room that is equipped with a stove and designated solely for cooking
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