The determinants of agricultural output and the role of food aid: The case of Sub-Saharan Africa

Food aid is a controversial issue. On one hand, it serves as an instrument for providing much needed relief to the hungry and starving. On the other hand, it is argued that food aid undermines local production, disrupts markets, causes trade distortions, distorts labor supply and creates a long-term dependency on food aid. This paper investigates factors that influence agricultural output in a group of Sub-Saharan African countries, with special emphasis on the role of food aid. We develop a three-sector model (exportables, importables and nontradeables) to describe the agrarian economy. This allows us to explicitly study the effect of food aid via a trade theoretic model, where relative price changes between the three sectors play an important role. Reduced-form equations from this model serve as a basis for the econometric analysis. Using panel data for a group of Sub-Saharan African countries, we find that food aid had a negative impact on agricultural output in all three sectors. Other determinants of agricultural output incorporated in the study were resources (labor, land, machines), natural and manmade shocks (e.g. drought, civil unrest), corruption and governance. Resources appear to have a positive impact on output and so did a durable and stable regime. The incidence of drought had a negative effect on all categories of output while the incidence of civil wars had a negative impact on exportables and importables but a positive impact on nontradeables. Most of the variables incorporated in the analysis and the methodology used differ from the previous literature.