The Economic Theory of Agrarian Institutions (Clarendon Paperbacks)

417 Pages·1992·21.62 MB·English

by  Pranab Bardhan

The Economic Therory of agrarian Instiutions
This page intentionally left blank
The Economic Theory
of Agrarian Institutions
EDITED BY
Pranab Bardhan
CLARENDON PRESS • OXFORD
This book has been printed digitally and produced in a standard specification
in order to ensure its continuing availability
OXFORD
UNIVERSITY PRESS
Great Clarendon Street, Oxford OX2 6DP
Oxford University Press is a department of the University of Oxford.
It furthers the University's objective of excellence in research, scholarship,
and education by publishing worldwide in
Oxford New York
Auckland Bangkok Buenos Aires Cape Town Chennai
Dar es Salaam Delhi Hong Kong Istanbul Karachi Kolkata
Kuala Lumpur Madrid Melbourne Mexico City Mumbai Nairobi
Sao Paulo Shanghai Taipei Tokyo Toronto
Oxford is a registered trade mark of Oxford University Press
in the UK and in certain other countries
Published in the United States
by Oxford University Press Inc., New York
© Pranab Bardhan 1989
The moral rights of the author have been asserted
Database right Oxford University Press (maker)
Reprinted 2004
All rights reserved. No part of this publication may be reproduced,
stored in a retrieval system, or transmitted, in any form or by any means,
without the prior permission in writing of Oxford University Press,
or as expressly pennitted by law, or under terms agreed with the appropriate
reprographics rights organization. Enquiries concerning reproduction
outside the scope of the above should be sent to the Rights Department,
Oxford University Press, at the address above
You must not circulate this book in any other binding or cover
And you must impose this same condition on any acquirer
ISBN 0-19-828762-3
Contents
Contributors
I. GENERAL INTRODUCTION 1
1. Alternative Approaches to the Theory of Institutions in
Economic Development
Pranab Bardhan 3
2. Rational Peasants, Efficient Institutions, and a Theory of
Rural Organization: Methodological Remarks for
Development Economics
Joseph E. Stiglitz 18
II. LAND AND LABOUR 31
3. Theories of Sharecropping
Nirvikar Singh 33
4. A Comparison of Principal-Agent and Bargaining
Solutions: The Case of Tenancy Contracts
CliveBell 73
5. Contracts with Eviction in Infinitely Repeated Principal-
Agent Relationships
Bhaskar Dutta, Debraj Ray, and Kunal Sengupta 93
6. Production Relations in Semi-arid African Agriculture
Hans Binswanger, John Mclntire, and Chris Udry 122
HI. CREDIT AND INTERLINKED TRANSACTIONS 145
7. Rural Credit Markets: The Structure of Interest Rates,
Exploitation, and Efficiency
Kaushik Basu 147
8. Credit and Agrarian Class Structure
Mukesh Eswaran and Ashok Kotwal 166
9. Credit Rationing, Tenancy, Productivity, and the Dynamics
of Inequality
Avishay Braverman and Joseph E. Stiglitz 185
10. On Choice among Creditors and Bonded Labour Contracts
T. N. Srinivasan 203
11. Some Aspects of Linked Product and Credit Market
Contracts among Risk-neutral Agents
Clive Bell and T. N. Srinivasan 221
vi Contents
12. A Note on Interlinked Rural Economic Arrangements
Pranab Bardhan 237
13. Interlinkages and the Pattern of Competition
Debraj Ray and Kunal Sengupta 243
IV. MARKETING AND INSURANCE 265
14. Agricultural Institutions for Insurance and Stabilization
David M. Newbery 267
15. Peasants' Risk Aversion and the Choice of Marketing
Intermediaries and Contracts: A Bargaining Theory of
Equilibrium Marketing Contracts
Pinhas Zusman 297
V. CO-OPERATIVES, TECHNOLOGY, AND THE STATE 317
16. Agricultural Producer Co-operatives
Louis Putterman 319
17. Institutional Analysis of Credit Co-operatives
Avishay Braverman and J. Luis Guasch 340
18. Agrarian Structure, Technological Innovations, and the
State
Alain de Janvry, Elisabeth Sadoulet, and Marcel
Fafchamps s 356
Bibliography 383
Index 405
Preface
It is part of an institutional ritual in development economics, as in much of
economic theory, to relegate all institutional matters into a 'black box.' The
box is supposed to contain something vaguely important, but it does not
usually receive more than a nodding, if somewhat intriguing, recognition in
passing. In this book we squarely face the issue of theorizing about the
rationale and consequences of some economic institutions and contractual
arrangements that are particularly prominent in poor agrarian economies.
Even though the authors draw upon at least the stylized versions of some
existing institutions, the emphasis here is more on abstract model-building
than on empirical details, more on rigorous analysis than on the kind of
descriptive accounting that is common in the institutionalist literature. The
models illustrate how some of the tools of advanced economic theory can be
fruitfully used in understanding aspects of age-old institutions.
This is, of course, not to deny that a fuller understanding has to involve
their social and cultural context and the underlying political and historical
processes. The treatment is also partial in the sense that we focus on only a
handful of institutional types, leaving out many other important agrarian
institutions (for example, the extended family as a risk-pooling institution in
agricultural production, institutions of intergenerational property transfer,
or local irrigation organizations for communal water management and
conflict resolution) which may be analysed with similar tools. Our attempt
here is primarily to begin a line of enquiry in a hitherto largely uncharted and
unexplored area, without any pretension of comprehensiveness either in
understanding or in coverage of the territory.
In my editorial work I have received able assistance from my students,
Michael Kevane, and Ashish Vaidya.
Berkeley, California P.B.
Contributors
Pranab Bardhan, University of California at Berkeley
Kaushik Basu, Delhi School of Economics
Clive Bell, Vanderbilt University
Hans Binswanger, World Bank
Avishay Braverman, World Bank
Alain de Janvry, University of California at Berkeley
Bhaskar Dutta, Indian Statistical Institute, New Delhi
Mukesh Eswaran, University of British Columbia
Marcel Fafchamps, , University of California at Berkeley
J. Luis Guasch, University of California at San Diego
Ashok Kotwal, University of British Columbia
John Mclntire, , International Livestock Centre for Africa, Addis
Ababa
David M. Newbery, Churchill College, Cambridge
Louis Putterman, Brown University
Debraj Ray, Indian Statistical Institute, New Delhi
Elisabeth Sadoulet, University of California at Berkeley
Kunal Sengupta, Indian Statistical Institute, New Delhi
Nirvikar Singh, University of California at Santa Cruz
T. N. Srinivasan, Yale University
Joseph E. Stiglitz, Stanford University
Chris Udry, Yale University
Pinhas Zusman, Levi Eskol School of Agriculture, Israel
PART I
General Introduction