Globalization, privatization, and vertical coordination in food value chains in developing and transition countries

TLDR

Food and agricultural commodity value chains in developing and transition countries have been reshaped by privatization, market liberalization, and global integration, leading to the collapse of state‑controlled coordination and the rapid rise of private vertical coordination driven by consumer demand for quality and safety and by production constraints. This article demonstrates the significance of these changes, discusses their implications for efficiency and equity, and presents empirical evidence on their effects in several developing and transition countries.

Abstract

Abstract Food and agricultural commodity value chains in developing and transition countries have undergone tremendous changes in the past decades. Companies and property rights have been privatized, markets liberalized, and economies integrated into global food systems. The liberalization and privatization initially caused the collapse of state‐controlled vertical coordination. More recently, private vertical coordination systems have emerged and are growing rapidly as a response to consumer demand for food quality and safety on the one hand and the farms' production constraints caused by factor market imperfections. In this article we (1) demonstrate the importance of these changes, (2) discuss the implications for efficiency and equity, and (3) provide empirical evidence on the effects in several developing and transition countries.