Why Domestic Food Prices Matter to Growth Strategy in Semi-Open West African Agriculture

It is argued that the conventional wisdom that domestic food prices are purely endogenous to the determination of equilibrium real exchange rates ignores structural features of West African economies that make them "semi-open". The features include very high transfer costs from West African ports to producing and consuming points, the need to trade on world markets in order to grow, low comparative advantage in starchy food production on world markets, and a close link between the prices of basic food staples and the costs of exportables production, through the labour market. This introduces important exogenous elements into the determination of equilibrium prices of major domestically produced starchy staples. Weather shocks and food sector policies have scope for changing the price of non-tradables in a lasting fashion relative to the prices of importables and exportables.