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Humans do not live in isolation. Observed microeconomic behavior depends on people’s identities and on the formal and informal social relations that shape their world. These behaviors subsequently affect individual and group identity and relationships, and thereby consumption, production and exchange behaviors, creating a system with dynamic feedback. Such systems commonly lead to low-level, stable states characteristic of poverty traps. Economists are just beginning to explore the consequences of such phenomena, asking critical questions such as why does poverty persist in a world of abundant resources? Why are some people excluded from growth processes while others are not? Why do some people enjoy access to scarce resources or the efficiency enhancements associated with cooperation while others do not? "Good governance" has taken center stage in the international development arena. Developing countries have placed good governance prominently on their development agenda, and donors make their funding increasingly dependent on indicators of governance performance. However, most of the widely used governance indicators are based on surveys among business enterprises in the formal sector. Hence, little is known about governance that matters for the rural poor. How effective a government is in creating a conducive business environment for a foreign investor is not necessarily related to its effectiveness in addressing the needs of poor farmers. Since the majority of the world's poor live in rural areas and depend on agriculture for their livelihoods, there is a need to better understand which dimensions of governance matter for smallholder agriculture, and how governance can be improved in this respect. Against this background, the presentation will
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