Does Increasing Agricultural Exports Raise Income Instability? An Empirical Note

Abstract

Recent discussions of food security issues for developing countries have drawn attention to short-term fluctuations in effective demand, especially of the low-income households, as a critical area for policy analysis. Real income instability is presumed to be particularly acute in the rural areas, given fluctuating agricultural production and volatile international markets for primary commodities. This paper provides a systematic examination of income variability in food and export crop production, developing a suitable framework of analysis and using it to investigate the instability of total agricultural crop income in the Philippines and how it has been affected by the marked increase in the share of export crops over the postwar period. Some policy implications of the empirical results are briefly considered.