Chapter 23: Community-oriented versus market-oriented cooperative organizations in developing countries: is open membership an indicator for success or failure?
In this contribution we discuss the importance of cooperative structures for economic development in rural areas in developing countries. In particular, the rural poor face the consequences of market and government failures (Markelova et al., 2009). Collective action is seen as one of the instruments to improve the access of the poor to all kinds of club goods and even local public goods. It is also seen as an instrument to strengthen the market position of smallholders. Cooperatives are well known all over the world. In the developed economies they still play a major role in agriculture. ‘In the European Union there are some 30,000 agricultural cooperatives with 9 million members, accounting for 50% of the overall market for inputs and 60% of the market for products’ (Mercoiret et al., 2006, p. 6). Advocates stress the importance of these organizations to give the poor access to goods and services and see it as an instrument for development. At the same time many difficulties are observed and a substantial number of scholars prefer free market mechanisms, and focus their attention on redressing market failures and the institutional environment (World Bank, 2007; Barham and Chitemi, 2009). Despite efforts to reduce market and government failures, the problems persist in many countries and, in particular, in rural areas.
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