Burley Tobacco Clubs in Malawi : Nonmarket Institutions for Exports

This paper studies nonmarket
institutions that facilitate exports. In Malawi, as in many
other developing countries, farmers face numerous
constraints that disconnect them from export markets. The
paper explores the role of a local institution, the burley
tobacco clubs, in bridging smallholders to exports. Burley
clubs potentially enable farmers to increase their tobacco
farming productivity by providing services related to
institutional access, collective action, economies of scale,
and supporting network. Using matching methods and
instrumental variable techniques, the authors find that
tobacco club membership causes an increase of between 40-74
percent in output per acre and an increase of between 45-89
percent in tobacco sales per acre. Instead, neither the land
share allocated to tobacco nor the unit value obtained by
the producers is affected by club membership.