Farmer’s Response to Price in Underdeveloped Areas: The Nicaraguan Case.
author
Pedro Belli
source
American Economic Review
date
1970
Abstract
The article discusses farmer’s response to price in underdeveloped areas. The author presents the case of Nicaragua in his analysis. He states that the behavior of farmers as economic agents has been a subject of some controversy. On the one hand, there are those who believe that farmers, especially farmers in underdeveloped countries, do not respond to price and income incentives and on the other, there are those who maintain that theft behavior is in accord with economic theory but that “shift variables” veil the relationship. At first sight it may seem as if the growth of cotton farming in Nicaragua presents a good case in favor of those who do not believe in the rationality of farmers. Cotton has been in the Nicaraguan export ledger at least since the beginning of the nineteenth century, but it was not until 1950 that cotton exports began to acquire some importance. It was around that time that Nicaraguans from all walks of life apparently decided that the road to wealth was paved with cotton.