Distortions to Agriculture and Economic Growth in Sub-Saharan Africa

A new set of estimates of policy induced distortions to relative prices is used to examine how they affect economic growth. We find that on impact there is no significant response of relative agricultural price distortions to changes in real GDP per capita growth of Sub-Saharan African countries. By contrast, we find a statistically significant and sizable negative effect of relative agricultural price distortions on growth. Our fixed effects estimates suggest that, during 1960-2005, a ten percentage point increase in distortions to relative prices decreased the region's real GDP per capita growth rate by half a percentage point per annum.