尼泊尔的劳动在空间的分工

LOps 3&(Sso POLICY RESEARCH WORKING PAPER 2845 The Spatial Division of Labor in Nepal Marcel Fafchamps Forhad Shilpi The World Bank Development Research Group Rural Development May 2002  POLICY RESEARCH WORKING PAIPER 2845 Abstract Fafchamps and Shilpi examine how economic activity crops are more important at intermediate distances. and market participation are distributed across space. Isolated villages revert to self-subsistence. The findings of Applying a nonparanmetric von Thinen model to the study are consistent with the von Thunen model of Nepalese data, the authors uncover a strong spatial concentric specialization, corrected to account for city division of labor. Nonfarm employment is concentrated size. Spatial division of labor is closely related to factor in and around cities, while agricultural wage employmenit endowments and household characteristics, especially at dominates villages located furtlher away. Vegetables are the local level. produced near urban centers. Paddy and commercial This paper-a product of Rural Development, Developi-nent Research Group-is part of a larger effort in the group to understand the importance of spatial factors in rural development. Copies of the paper are available free from the World Bank, 1818 H Street NW, Washington, DC 20433. Please contact Forhad Shilpi, room MC3-536, telephone 202-458- 7476, fax 202-522-1151, email address fshilpti@worldbank.org. Policy Research Working Papers are also posted on the Web at http://econ.worldbank.org. The authors may be contacted at marcel.fafcliamps@)economics.ox.ac.uk or fshilpi@?worldbank.org. May 2002. (62 pages) The l'olicy Research Working Paper Series dissenimates the findings of wvork in progress to encourage the exchange of ideas aboiut developmzent issues. An objective of the semes is to get the findings out quzickly, even if the presentations are less than fully polished. The papers carry the names of the authors and shotuld be cited aicordingly. Th2e findings, interpretations, and conclusiois expressed in this paper are entirely those of the authors. They do iiot necessarily represent tl7e viewo of the World Bank, its Lxecitive Directors, or the countries they represent. Produccd by the Research Advisory Staff  The Spatial Division of Labor in Nepal' Marcel Fafchamps University of Oxford Forhad Shilpi The World Bank Abstract JEL classification: RI 1, 018 Keywords: economic geography, South Asia, specialization, roads The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the view of the World Bank, its Executive Directors, or the countries they represent. We would like to thank Gershon Feder for his constant moral and intellectual support. We acknowledge generous support from the former Chief Economist of South Asia Region John Williamson. Road distances and population densities were calculated with the help of Uwe Deichmann, Jyotsna Puri and Andrew Nelson at the GIS Lab of the Devetopment Economics Research Group (DECRG) of the World Bank. We would like to akowledge Giovania Prennushi and Salman Zaidi for NLSS data and complementary documentation and Lawrence Zhangj and Misuzu Otsuka for excellent research assistance. We also received useful comments on an earlier draft from seminar participants at World Bank. Financial support from the Development Economics Research Grout (DECRG) is also gratefully acknowledged.   1. Introduction After decades of neglect, the economics profession has rekindled its interest in geographical phenomena. Much recent work has been devoted to agglomeration effects across regions and countries (e.g. Krugman 1991b, Fujita, Krugman and Venables 1999a, Ciccone and Hall 1996). Apart from research focusing on cities (e.g. Henderson 1974, Lamnpard 1968, Abdel-Rahman 1994, Rauch 1993, Fujita, Krugman and Mori 1999b, Arthur 1988, Glaeser, Kallal, Sheinkman and Shleifer 1992, Ellison and Glacser 1997, Glaeser, Scheinkman and Shleifer 1995), most empirical work has remained at a fairly aggregate geographical level (e.g., Ciccone and Hall (1996), Radelet and Sachs (1998), Hummels (1995), Hall and Jones (1996) on countries; Desmet (1998) on European regions; Barro and Sala-I-Martin (1991) on U.S. states). Little attention has been devoted to more disaggregatel geographical units that have a predominantly rural character, such as villages or counties (see, however, Ciccone and Hall (1996), Ciccone (1997), Fafchamps and Helms (1996), Desmet and Fafchamps (2000)). This is somewhat surprising given that much of traditional economic geography focuses on spatially disaggregated phenomena such as the distribution of cities over space and their relationship with surrounding rural areas (e.g. von Thunen 1966, Isard 1956, Christaller 1966, Losch 1954, Dicken and LLoyd 1990, Jacobs 1969). There is also little recent work by economists on the spatial distribution of economic activity across space in rural and urban areas of the Third World, in spite of a long tradition of research on regional issues among development economists. This is not to say that there has been no work on spatial issues. The contrast between cities and countryside has long attracted the attention of development economists, to the point that this contrast has become a fundamental organizing concept of all development theory (e.g. Lewis 1954, Harris and Todaro 1970). There has also been a lot of work on work migration, non-farm production in rural areas (e.g., survey by Reardon (1997); for Nepal, see Seddon, Adhikari and Gurung (1999)), and on the spatial 2  integration of agricultural markets (e.g. Takayamna and Judge 1971, Ravallion 1986, Dercon 1995, Timmer 1986, Baulch 1997, Fafchamps 1996). But this work remains fragmentary in the sense that it does not examine, in a comprehensive manner, how rural areas interact with each other and with cities as a function of their geographical proximity to cities. The purpose of this paper is to begin filling this lacuna by examining how Nepalese households fit into the local economy as a function of their proximity to urban centers. Nepal is a particularly suitable place to study spatial specialization given the extreme diversity of the country in terms of accessibility. At one end of the spectrum, Terai villages are a few hours away by truck from many towns and cities, while Nepalese villages tucked in the Himalaya are among the most difficult to access anywhere on earth. As already argued by Jacoby (2000), Nepal is the perfect place to examine the effect of geographical isolation on economic activity. Using household data from the Living Standard Measurement Survey (LSMS) of 1995/6, we investigate geographical patterns of agricultural production, agricultural sales and purchases, and non-farm work. To control for differences in road quality, travel time is used as a measure of distance instead of mileage. City population and travel time are instrumented to control for possible endogeneity. Our contribution is threefold. First, by using several different measures of economic activity and market participation, we provide a detailed and compresensive picture of the spatial division of labor in a poor country. Second, thanks to non-parametric methods, we obtain precise estimates of the distance at which various activities dominate. As a result, we can characterize the various forms that market specialization takes depending on location. Third, we show that spatial effects are large and that city size matters. Regarding spatial specialization, our results largely confirm the von Thilnen hypothesis of concentric circles around cities that vary according to transport costs (e.g. Henderson 1988, 3  Dicken and LLoyd 1990, Abdel-Rahman 1988, Fujita 1988). Nepalese households living near markets and cities are more likely to engage in non-farm (wage) work rather than prodluce agri- cultural goods for sale. Fears that cities 'steal' non-farm jobs from the surrounding countryside do not appear justified in the case of Nepal. If anything, it is proximity to markets and towns that fosters non-farm activity, especially wage non-farm employment. As one moves away from markets and towns, the emphasis shifts progressively from non-farm activity to agricultural production for sale. As anticipated, vegetables tend to be produced close to cities because of their perishability while commercial production of storable crops such as rice and pulses takes place furlher away. Minten and Kyle (1999) obtain a similar result in Zaire. The emphasis on commercial farming also raises hired labor use. Households located close to towns and markets rely primarily on the market for their consumption needs. Labor migrations are also more frequent in these villages but the effect is not strong. As one moves further away from towns and markets, households revert to self-subsistence for crops but shift to livestoch production as a source of cash income. This is because animals and animal products (e.g., ghEe) are more easily transported to distant markets. Isolated villages do not interact with the market at all. These results confirm earlier work in Nepal by Jacoby (2000) and Seddon et al. (1999). Regarding the spatial range over which certain activities dominate, we find that non-farm wage employment takes place primarily within four hours travel time from large towns. Within villages, non-farm employrment is concentrated within one hour of the nearest market. Vegetable production is important in the 1-3 hours range, while the production of paddy for sale dominates the 3-5 hours range. Beyond 5 hours travel time from cities, households no longer sell crops and rely on production to satisfy consumption needs. They also stop purchasing fertilizer. For those located more than 5 hours from a market or city, cash income can still be obtained from livestock 4  but households located more than 10 hours from the market essentially revert to self-subsistence. To our knowledge, this is the first time that a comprehensive quantification of these distance ranges has been presented for a poor country. Spatial effects are very strong and robust determinants of activity choice and market par- ticipation. For instance, a household located right next to a rural market would allocate 40% of its time to non-farm self-employment and 30% to non-farm wage employment compared to 0% for a household located one hour away from the market. Ignoring such spatial effects would undoubtedly bias poverty estimates. Spatial effects are also important for policy. Our results, for example, show that households located more than 5 hours away from towns and market do not sell crops and do not consume fertilizer. Any effort to promote agricultural innovation would need to take these effects into account to be successful. The paper is organized as follows. Concepts and theory are discussed in Section 1, together with the econometric approach. The data and its main characteristics are presented in section 2. We also describe how our various measures of geographical proximity are constructed. Section 3 tests the effect of distance to markets and cities. Section 4 investigates the role of factor endow- ments and preferences in activity choice and market participation. Conclusions are summarized at the end. 2. Theory and Concepts German economist von ThtOnen was the first to hypothesize, as early as 1842, that economic activity need not be spread evenly across space even if land is undifferentiated between loca- tions. His basic idea was that rural areas surrounding cities specialize in different agricultural products. He further argued that the product they specialize in depends on the cost of trans- 5  porting output to the marl:et. Locations close to the city specialize in high transportation cost goods, such as milk and vegetables, while locations further away specialize in less perishable, lower transport cost commodities such as cereals and pulses. Rural communities klcated too far from cities to trade with them must turn to self-subsistence in both agricultural and non- agricultural commodities Erugman (1991b), the latter being produced using small-scale, artisan technology. This theory is usually represented graphically as concentric circles of specialization, beyond which lies undifferentiated self-subsistence areas. Adding to this theory, Dore (1987) and Jacobs (1984) argue that peri-urban agriculture also benefits from spillover effects in technol- ogy and marketing, thereby suggesting something like concentric circles of technology usage as well. Another addition is the realization that isolated communities can interact with the global economy by sending workers away for extended periods of time, thereby triggering patterns of long-term work migrations to cities or plantations. Von Thilnen's theory was further refined by Losch (1954), Isard (1956) and Christaller (1966) who studied the relationship between cities of various sizes and between them and surrounding rural areas. They hypothesize the existence of hierarchies of cities performing different roles, each with its own rural hinterland (see Lee (1993) and Fafchamps and Helms (1996) for illustrations in Mexico and Guatemala). These refinements do not qualitatively affect the spatial specialization idea, although they may alter the shape it takes (e.g., honeycomb instead of circle). They also bring out the role that city size has on the width of concentric circles of rural specialization, larger cities requiring more vegetable and food products than small cities. More recently, it has also been shown that, with two or more immobile factors instead of one (e.g., land), more complex patterns can be generated that include incomplete or partial specialization (e.g. ?, Venables and Limao 1999). The recent economic geography literature has revisited many of these themes (e.g. Henderson 6  1988, Krugman 1991a, Fujita et al. 1999a). Much attention has also been devoted to the inner organization of cities themselves (e.g. Fujita 1988, Abdel-Rahman 1993, Abdel-Rahman 1994, Henderson 1974). In this respect, the literature has emphasized one important organizing prin- ciple, namely the tension between, on the one hand, agglomeration effects that incites firms to cluster, and, on the other, housing prices and commuting costs that raise workers' wages. This has, for instance, led to models of cities whereby activities that benefit from strong agglomera- tion effects, such as financial services, take over city centers while workers live at the periphery where housing costs are lower. Depending on travel costs for consumers, shopping districts locate in city center or in residential areas (e.g. Abdel-Rahman 1988, Fujita 1988). In these models, the size of cities depends critically on their ability to attract workers. This in turn depends on the strength of agglomeration effects, which affects return to labor, and on commuting costs and housing prices, which affect wages. Further refinements, such as pollution, congestion, and the provision of intermediate goods can be added to generate different structures, e.g., industrial basins surrounded by residential towns some distance away (Desmet and Fafchamps 2000). All these theoretical predictions can be summarized as follows. In its simplest form, the concentric circle theory predicts that what a community produces depends on distance from the nearest town. Villages located nearby town centers are expected to produce perishable products with a high transport cost, such as vegetables, while villages located further away are expected to produce low transport cost commodities such as cereals and pulses. A variant suggested by the urban economics literature has workers reside away from their work place. In this variant, villages and neighborhoods located close enough to cities count a number of commuters, that is, individuals who work in the city but return to the village (the suburb) at night. The income they bring to their place of residence in turn generates suburban jobs in consumer services and retail trade - what could be called the 'shopping mall syndrome'. 7  Theories of hierarchies of cities predict more complex concentric zones whose width and spatial structure depend on their interaction with various cities of different sizes. In particular, they predict that larger cities have a larger hinterland, and that rural dwellers may buy and sell from different cities sirmultaneously. The presence of more than one immobile factor leads to incomplete specialization, whereby villages produce a multiplicity of goods at the same time. Finally, all theories predict that isolated locations must be self-sufficient in both agricultural and non-agricultural products, except for long-term work migrations. These predictions can be empirically investigated as follows. Consider a vector of measures of economic specialization and market participation for individual households i. Let this vector be denoted {1y } for z = 1, ..., Z, where yil is, say, vegetable production, y2 is non-farm self- employment, y3 is rice purchases, etc. Further suppose that we have information on the distance to the market center nearest to household i, denoted di. The von Thilnen hypothesis, in its simplest form, predicts a relationship between y1 and d,. As is clear from the economic geography literature, this relationship is expected be non-linear, with unknown inflection points. The relationship can be written: yi4 f (d) +