Optimal Locational Choice for Agribusinesses in Madagascar
The traditional location theory predicts that firms' locational choice is independent of the output demand. However, firms are often concentrated in large markets. In Africa, agrobusinesses are expected to play an important role to facilitate agricultural growth but are hardly available in rural areas. This paper examines the question of why agribusinesses are not located in local production areas despite the clear benefits expected from close proximity to their inputs. By applying the spatial autocorrelation Tobit model, the paper estimates the impacts of market and farm accessibility on agglomeration of new agrobusinesses in Madagascar. The findings show that market accessibility and agglomeration economies are important for attracting more agrobusinesses. The quality of labor is also an important determinant for their locational choice. The findings are consistent with some models of location theory: firms move away from rural areas where they may still have monopsony power, toward urban areas where productivity is higher.
| Main Author: | |
|---|---|
| Format: | Working Paper biblioteca |
| Language: | English |
| Published: |
World Bank, Washington, DC
2018-06
|
| Subjects: | LOCATION THEORY, GEOSPATIAL ECONOMICS, AGGLOMERATION ECONOMIES, SPATIAL AUTOCORRELATION, CENSORED REGRESSION, AGRIBUSINESS, LABOR MARKET, |
| Online Access: | http://documents.worldbank.org/curated/en/378801529588239387/Optimal-locational-choice-for-agrobusinesses-in-Madagascar-an-application-of-spatial-autoregressive-Tobit-regression https://hdl.handle.net/10986/29941 |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| Summary: | The traditional location theory predicts
that firms' locational choice is independent of the
output demand. However, firms are often concentrated in
large markets. In Africa, agrobusinesses are expected to
play an important role to facilitate agricultural growth but
are hardly available in rural areas. This paper examines the
question of why agribusinesses are not located in local
production areas despite the clear benefits expected from
close proximity to their inputs. By applying the spatial
autocorrelation Tobit model, the paper estimates the impacts
of market and farm accessibility on agglomeration of new
agrobusinesses in Madagascar. The findings show that market
accessibility and agglomeration economies are important for
attracting more agrobusinesses. The quality of labor is also
an important determinant for their locational choice. The
findings are consistent with some models of location theory:
firms move away from rural areas where they may still have
monopsony power, toward urban areas where productivity is higher. |
|---|