Potato importance for development focusing on prices

Abstract

This paper studies potato prices and consumption in the progress of economic development. Potato status tends to evolve from a luxury to a normal and, lastly, to an inferior good. In the developed world, where the potato thrived and became a food for the poor, prices of the inferior potato attract little interest due to general welfare, which further complicates discerning economic effects by computation. Contrarily, in many developing countries, due to supply constraints the potato is a relative expensive, non-staple, normal good, with little social significance. Whereas it is a common misconception that tastes in developing countries differ from advanced economies, low incomes, together with relatively high potato prices, present a real and obvious hindrance to wider potato use among the poor in the underdeveloped world. Local regressions on FAO data reveal empirical advantages favoring potato price system research in developing countries, more likely yielding predictable, statistically significant, unbiased results. Correct policies could increase potato importance in developing countries and stimulate sustainable and pro-poor growth where consumers receive affordable potatoes, while also producer incentives for greater productivity improve. Furthermore, potato-led research presents widening potential into also understanding general social structures of underdevelopment as similar factors explain both cross-border incomes and potato prices.