The impact of connectivity on market interlinkages: evidence from rural Punjab

Up to the 1980s it was generally accepted that many key issues in agrarian development could not be studied without an understanding of market interlinkages. Recently, however, this theory has lost its importance in development literature. Based on a household-level survey from rural Pakistan, this paper seeks to re-introduce the importance of interlinkages by illustrating their exploitative potential, particularly in unequal isolated villages where landlords are essentially monopolist/monopsonist. The solution proposed is to break isolation. Making use of an exogenous shock found in the construction of a motorway, the study finds that while connectivity does not break interlinkages completely, it does significantly reduce their exploitative nature.