Improving the Impact of Market Reform on Agricultural Productivity in Africa: How Institutional Design Makes a Difference

ways of constructing [markets].” Prescribing free markets is an incomplete thought (Schmid
1992).

Researchers working to support African development can make a contribution in both their
positive and normative analysis by enabling policymakers to understand how particular institutions
are likely to alter the performance of the newly emerging agricultural systems in Africa.
Unfortunately, a universal set of prescriptions is impossible given the diverse history, cultural
norms, and existing institutions in each particular country setting. Moreover, countries that adopt
the formal rules of another economy will have very different performance characteristics than the
first economy because of different informal norms and enforcement. “Transferring the formal
political and economic rules of successful Western market economies to third-world and Eastern
European economies is not a sufficient condition for good economic performance” (North 1994,
p. 366).

However, what follows is a general set of guidelines to reduce the costs and risks of participating
in the food systems under most country conditions.

5.1 Improve Road, Rail, Port, and Communication Infrastructure

Governments must make this a priority. Donor support in this area would make the market
liberalization measures they advocated more successful. The dilemma is that improving transport
infrastructure is very costly. Phased investments may be required which first target high potential
food and cash-crop regions where agricultural intensification is more likely to be financially
sustainable. An improved market infrastructure also requires further policy change to remove
remaining import tariffs on vehicles and spare parts.

One important role for research is to identify where such infrastructure investments would have
the highest payoffs. For example, by analyzing food production, consumption, and price
dispersion patterns in a country, researchers can provide insights into where investment in a road
would do the most to improve food security or increase production potential through raising farm
output prices and lowering farm input prices. Given the high cost of such infrastructure
investments, such targeting is extremely important.

5.2 Invest More in Market-Oriented Agricultural Research

In market-oriented growth strategies, well tested and improved cultivars and management
practices for commodities for which there are viable markets, work synergistically with improved
input and output markets to create sustainable conditions for intensification and productivity
growth (Boughton et al. 1995; Oehmke and Crawford 1996). Yet national research budgets and
donor funding of technology development are in many cases declining. Many national agricultural
research systems (NARS) still face problems of low salaries, dismal conditions of service for their
researchers, and continued shortages of operational funds. The history of agricultural research in
Uganda shows the impossibility of turning research off and on. It takes only a short lapse in

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