Market Access, Trade Costs, and Technology Adoption: Evidence from Northern Tanzania
Shilpa Aggarwal, Brian Giera, Dahyeon Jeong, Jonathan Robinson, Alan Spearot
We collect data on prices, travel costs and farmer decisions to quantify market access and its impact on agricultural productivity in 1,183 villages in two regions of Tanzania. Villages at the bottom of the travel cost-adjusted price distribution face 40-55% less favorable prices than those at the top. A one standard deviation increase of village-level remoteness is associated with 20-25% lower input adoption and output sales. A spatial model of input adoption conservatively estimates that farmers behave as if travel costs are 4% ad-valorem per kilometer. Counterfactuals suggest that halving travel costs would double adoption and reduce the adoption-remoteness gradient by 39%.
JEL Codes: F14, O12, O13, O18, Q12
Keywords: market access, inputs, technology adoption, transport costs, roads, output sales