ABSTRACT
The current surge of globalization is creating the opportunity to increase income for the rural poor by conveying demands from advanced economies for such high-valued products as flowers, fruits and vegetables to the hinterlands that have hitherto been bypassed in development currents. However, rural producers in low-income economies will not be able to capture this opportunity unless adequate channels exist for connecting them with distant urban markets and/or centers for exports. It is well known that rural markets in low-income economies are underdeveloped, being characterized by high transaction costs owing to imperfect information and high risk as well as absence of effective mechanisms to protect property rights and to enforce contracts. Under these constraints it has often been feared that small producers and petty traders in rural hinterlands tend to be exploited by foreign or urban traders who have monopoly access to global information – the so-called “asymmetric information problem.”
