Overcoming the Egyptian cotton crisis in the interwar period: The role of irrigation, drainage, new seeds, and access to credit (2021)
Panza, Laura (Author)
Karakoç, Ulas (Author)
Economic History Review
Volume: 74
Issue: 1
Pages: 60-86
After experiencing a period of spectacular growth during the late nineteenth century, the Egyptian cotton sector underwent a phase of stagnation, which was followed by a gradual and steady increase in output during the interwar period. Drawing on a new panel dataset at the province–year level, this article explores the determinants of the upturn in cotton output, running a horserace between credit, seed technology, and infrastructure. In order to address endogeneity concerns, an instrumental variable approach is adopted, using a modified version of Bartik's shift-share instrumental variable. Our results provide supporting evidence that peasants switched to a lower-yielding cotton variety as a response to changes in relative price. Moreover, our production function estimates show that two key factors had a positive impact on output growth: credit availability and the adoption of new cotton varieties.
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