Module 2400
The political economy of agriculture in high-income countries

Instructor

Professor Dr Thomas Herzfeld (herzfeld@iamo.de) is head of the Department Agricultural Policy and taught courses in Agricultural and Food Policy, Microeconomics, and Economic Modelling at Universities in Kiel, Wageningen and and Halle-Wittenberg.

1. Time schedule and place

The course takes place at IAMO, Conference Room II, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), Theodor-Lieser-Str. 2, 06120 Halle.

2. Course Description

Agricultural economists quite often concentrate on the analysis of the impact of agricultural and environmental policies on producers, consumers and taxpayers. But why do these policies exist? What explains the kind of implementation? How do policies change and what are the drivers of change? It is the aim of this module to introduce students to a range of political economic theories. Participants will be introduced to theoretical models, which assume rational decision making of agents as well as theories, which put this assumption in perspective. Agents’ limited capacity of acting rationally, e.g. due to a lack of information and complexity of information, has been more and more recognised in theories in economics as well as political sciences. Theoretical concepts will be applied to problems in agricultural markets ranging from the introduction of new technologies like GMO, investments in intensive livestock farming or slaughterhouses, to agricultural trade. Examples from the context of advanced industrialised as well as transition countries will be provided.

3. Learning objectives

In this module, students will

• be introduced to different theoretical approaches which are commonly used in the political economy of agriculture.
• discuss under which conditions which kind of theoretical approach may be most suitable to apply.
• learn how to analytically differentiate and apply concepts of different theoretical approaches, based on a simulation that they will carry out within this module.
• read and discuss applications of theoretical concepts in academic papers.

4. Course Outline

The course consists of lectures, individual assignments and one simulation. In a simulation, a real-world situation is recreated in which participants take up different roles in order to explore key mechanisms that are at work in such a situation. After the simulation, different theoretical approaches will be presented and discussed in their applicability to phenomena in the simulation. Furthermore, selected academic papers will be discussed during the course.

Organization and time

This is a one week block course which will be held at IAMO. There are some preparatory tasks to be fulfilled before the course takes place.

4.1. Before the course

Four to three weeks before the module starts, participants will be sent an outline of the different stakeholders in the simulation. They are asked to send a brief introduction to their educational background and a short motivation for favouring a certain role in the simulation. They will then be allocated a role, which they fulfil together with another PhD student. The team of two will prepare a role strategy before the course begins, which they send to the lecturers one week in advance. Additionally, participants are expected to read one paper out of a selection which will be distributed before the course starts.

4.2. One week Module

4.2.1. Introduction to the course

The course will start with introductory lectures in the morning of the first day, providing an overview of the origins of political economics, the context for the simulation and the theories that will be discussed in the second half of the module.

4.2.2. Simulation

The simulation lasts 1.5 days. The starting point of the simulation is, on the one hand, that decision-making in agricultural economics takes place in a context where stakeholders use political instruments and narratives to influence agricultural investment. On the other hand, societal stakeholders and policies determine if and which kind of information is available, how stable preference ordering can be, or the transaction costs for undertaking an economic activity.  A simulation allows players to experience the mechanisms that are at hand when an agricultural investment decision shall be taken. GMO crops or energy crops, investment in intensive livestock farming or slaughterhouses are just some examples for situations when decision-making in agriculture is closely interlinked with other societal stakeholders and politics. At the end of the simulation, each participant will write a debriefing of the simulation.

4.2.3. Lectures

The second part of the course takes 2.5 days, and consists of lectures on

• Tools of political economics
• Political economic models and theories of agricultural policies (e.g. Voting models, Interest group models, Models of bureaucracy, Policy games)
• Constructionism and its use in agricultural economics and political sciences
• New institutional economics theories in the agricultural economics and political sciences

Students will discuss academic papers with applications of the theory, which have to be read before.

4.2.4. Core literature

Anderson, K., ed. 2010. The Political Economy of Agricultural Price Distortions. Cambridge: Cambridge University Press.
Anderson, K., G.C. Rausser, and J.F.M. Swinnen. 2013. "Political Economy of Public Policies: Insights from Distortions to Agricultural and Food Markets." Journal of Economic Literature 51(2):423-477.
Van der Zee, F. 1997. Political Economy Models and Agricultural Policy Formation: Empirical Applicability and Relevance for the CAP. Wageningen: Mansholt Institute.
Exemplary case on the use of a simulation in agro-environmental contexts:
Stefanska, J., P. Magnuszewski, J. Sendzimir, P. Romaniuk, T. Taillieu, A. Dubel, Z. Flachner, and P. Balogh. 2011. “A Gaming Exercise to Explore Problem-Solving versus Relational Activities for River Floodplain Management.” Environmental Policy and Governance 21:454 – 471.

5. Teaching methods: Simulation (15 %), Lectures (35 %), Individual learning (50 %)

6. Grading
Each participant will receive a certificate of attendance. To obtain full credits, students have to pass the following elements:

• Preparation of the course reading (25 %)
• Active participation in the simulation and lecture (50 %)
• Presentation and discussion of a case study (25 %)

7. Credit points: 3

8. Requirements

Microeconomics at an intermediate level (decision making under certainty and uncertainty, game theory).
Preparation of the simulation: Active participation in the simulation is required as the simulation will be the basis for further discussions of the theories taught in the lectures.

9. Language: English

Further information
For further information on the venue please check http://www.iamo.de/iamo-links/kontakt/anfahrt.html.