The Political Economy of Agricultural Market Reforms in Developing Countries

Abstract

Abstract We study the determinants of agricultural market reforms in developing countries. What prompted the governments in these countries to abruptly begin deregulating their agricultural markets in the late 1980's? We answer this question by constructing a completely new dataset based on agricultural market regulations in 88 developing countries from 1960 to 2003. Our results suggest that the sudden and strong decline in the international price of agricultural commodities played a crucial role in destabilizing the financial equilibrium of marketing boards. In addition, changes in the rural representation in the political arena and government ideology also played significant roles in breaking up the status quo.