Trade and agricultural technology adoption: Evidence from Africa

The incentives for and effects of widespread technology adoption depend on the trade costs separating producers from input and output markets. I incorporate the decision to adopt imported fertilizer into a model of agricultural trade between 230 regional markets across sub-Saharan Africa. I then evaluate two alternative approaches to promoting technology adoption: lowering trade costs and subsidizing fertilizer. Whereas trade cost reduction shifts production towards the most productive regions, subsidies lead to larger increases in fertilizer use. Greater adoption lowers local food prices under existing high trade costs but only increases farmer incomes when trade costs are low.