Document Type

Article

Journal/Book Title/Conference

Economics Research Institute Study Paper

Volume

96

Issue

41

Publisher

Utah State University Department of Economics

Publication Date

1996

Rights

Copyright for this work is held by the author. Transmission or reproduction of materials protected by copyright beyond that allowed by fair use requires the written permission of the copyright owners. Works not in the public domain cannot be commercially exploited without permission of the copyright owner. Responsibility for any use rests exclusively with the user. For more information contact the Institutional Repository Librarian at digitalcommons@usu.edu.

First Page

1

Last Page

26

Abstract

This paper offers a simple model and corroborating empirical evidence that reconcile rivalrous claims about liberalization's impact on low-impact agrarian economies; growth and smallholder welfare reduction can go hand in hand. The model developed here reverses the causality o fBhagwati's well-known immiserizing growth model. Price shocks cause welfare effects that, in tum, drive output response, rather than output shocks, causing price shocks and then welfare effects, as in the trade theoretic original. Immiserized growth seems a plausible explanation for some important causes-e.g., the Malagasy case considered here-in which liberalization appears to have engendered both real agricultural growth and heightened food security stress among smallholder food producers.

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