Industrial policy and input market access: Evidence from Nigerian fertiliser
Ricardo Guzman  1@  
1 : Aix-Marseille School of Economics  (AMSE)
Aix-Marseille Université - AMU
AMU - AMSE 5-9 Boulevard Maurice Bourdet, CS 50498 ​13205 Marseille Cedex 1 -  France

Many economies use industrial policy to nurture sectors that produce inputs critical to economic development. While there are theoretical reasons that justify such state interventions, there is limited direct evidence on whether industrial policy in input markets could effectively induce productivity gains for firms that purchase these inputs. In this paper, I make progress on this front by evaluating an import substitution policy in Nigeria that sought to expand domestic production of inorganic fertiliser, a modern input to agriculture. In particular, I focus on assessing two components of the policy: the construction of domestic fertiliser manufacturing plants and a ban on imports of fertilisers. Combining household surveys and geospatial data on plant locations, I estimate the effects of policy-induced changes in access to fertiliser on adoption rates, and crop yields. To deliver credible estimates, I take advantage of the fact that farm-households were differentially exposed to the policy based on their distance to sources of fertiliser. I find that farms closer to sources of fertiliser exhibit higher rates of adoption on both the extensive and intensive margin, as well as greater crop yields. Preliminary evidence also suggests that the observed effect works through retail prices.


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