Posh spice or scary spice? The impacts of Madagascar's vanilla boom on household well-being
Social Science Research Network(2022)
Abstract
We examine the consequences of the nearly six-fold increase in the global price of vanilla on vanilla farming communities in Madagascar. We find a substantial increase in wealth for smallholder vanilla farmers, in the form of asset accumulation and higher informal savings. This increase in wealth is accompanied by improvements across several non-monetary dimensions of well-being, including improved performance on cognitive tests, increases in psychological well-being, and greater levels of optimism regarding the country's economic trajectory. There is little evidence of adverse impacts: while there is some evidence of increased crop theft, we observe no increases in other types of crime or even fear of crime. The high prevalence of smallholder vanilla production in the vanilla-growing areas of the country means that these benefits are widely shared. At the same time, we find no evidence of spillover benefits on non-producing households. These results contribute to the debate on the impact of price fluctuations of export commodities on economic development and indicate that higher returns on cash crop production can improve the well-being of producers across multiple dimensions.
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Key words
posh spice,scary spice,vanilla boom,madagascar,well-being
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