Abstract
Trade theory predicts that the expansion of markets induces households to specialize and intensify production. We use plot-level data (n = 64) from a panel study of 2 village and cross-sectional data from 511 households in 59 villages of Tsimane' Amerindians (Bolivia) to test the predictions. Results of bivariate analyses using both data sets suggest that as households integrate into the market economy they: (1) deforest more, (2) expand the area under rice cultivation, the principal cash crop, (3) sell more rice, and (4) intensify production by replanting more and by replanting newly cleared plots with maize, another cash crop. Results mesh with predictions about production specialization and intensification of trade theory. The analysis also produced results running counter to predictions from trade theory. For example, households and villages more integrated into the market planted more cassava and rice varieties, intercropped more, and put more crops in new fields than more autarkic households. Although the expansion of markets induces specialization and intensification in selected cash crops, it does not erase completely agricultural diversity. We hypothesize that despite the expansion of markets, households retain agricultural diversity because the market does not yet provide modern forms of self-insurance or well-functioning labor, credit, and product markets that would allow households to protect food consumption when faced with shocks. Without better insurance mechanisms, some agricultural diversity might still allow households to smooth consumption.