Subsidies and the African Green Revolution: Direct Effects and Social Network Spillovers of Randomized Input Subsidies in Mozambique
Michael Carter, Rachid Laajaj, Dean Yang
Abstract
The Green Revolution, which bolstered agricultural yields and economic well-being in Asia and Latin America beginning in the 1960s, largely bypassed sub-Saharan Africa. We study the first randomized controlled trial of a government-implemented input subsidy program (ISP) in Africa intended to foment a Green Revolution. We find that this temporary subsidy for Mozambican maize farmers stimulates Green Revolution technology adoption and leads to increased maize yields. Effects of the subsidy persist in later unsubsidized years. In addition, social networks of subsidized farmers benefit from spillovers, experiencing increases in technology adoption, yields, and beliefs about the returns to the technologies. Spillovers account for the vast majority of subsidy-induced gains. ISPs alleviate informational market failures, stimulating learning about new technologies by subsidy recipients and their social networks. (JEL O13, Q12, Q16, Q18)