Rural Windfalls and Urbanization: On Cocoa and Cities in Ivory Coast and Ghana

Type Working Paper - Financial Times
Title Rural Windfalls and Urbanization: On Cocoa and Cities in Ivory Coast and Ghana
Author(s)
Publication (Day/Month/Year) 2010
URL http://federation.ens.fr/ydepot/semin/texte1011/JED2010RUR.pdf
Abstract
While Africa was almost unurbanized at the turn of the 20th century, it has recently known spectacular urban growth. This is good news if cities are powerful engines of growth as emphasized by the economic geography literature. Yet, the agglomeration effects story was built on manufacturing and high value services, two sectors underrepresented in African cities. We develop another story where rural windfalls feeds urban growth through consumption linkages, with a case study on cocoa production and cities in Ivory Coast and Ghana. We combine decadal data on cocoa production and cities at the district level from 1921 to 2000, and we show how cities have followed the cocoa front. Our identification strategy uses the fact that cocoa is produced by ”eating” the virgin forest: (a) areas suitable to cocoa production are forested regions, basically the southern half of both countries, (b) for agronomic reasons, cocoa farmers move to a new forest every 25-50 years, this movement causing regional cycles, and (c) the cocoa front has started from the (South-)East of both countries. The cocoa front had to move westward, within the South. We can thus instrument cocoa production with a westward wave that we model. We find that cocoa production explains more than half of non-primate urbanization in both countries. We discuss and give evidence for the channels underlying this relationship, distinguishing what happens in new and old cocoa-producing regions.

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