Growth Linkages and Urban Development in Niger

ABSTRACT

ABSTRACT. It is increasingly recognized that the assumption that the supply of tradable output is perfectly elastic, which underlies many regional economic models (esp. economic base models), does not hold in many developing countries. When the supply of tradable output (primarily agricultural products) and, in many cases, non-tradable output is inelastic, the resulting income multipliers will be substantially reduced. Recent calls for the promotion of market towns and smaller urban centers have not fully considered the impact of supply in elasticities on the capacity of such measures to stimulate broad-based development. This study uses data collected from firms in several market-town systems in Niger to examine the probable consequences. The paper argues that such policies are unlikely to be effective in countries like Niger where the vulnerability of the rural economy has severely limited the elasticity of the supply response, especially for agriculture and nonfarm production by small-scale producers.