ECONOMIC RETURNS TO SOCIAL POWER - MERCHANTS FINANCE AND INTERLINKAGEIN THE GRAIN MARKETS OF BANGLADESH

The paper describes contrasting forms of interlinked transaction, and the exchange regimes in which they are situated, in two rural areas of Bangladesh, a fast-growing, Green Revolution area and a slow-growing, backward area. Some interlinkages fix output and finance prices for p roducers, others establish personalized monopsony in trade. The implic ations for rates of return and vulnerability of the different forms of interlinked transaction are explored. Perverse risk transfer (from le ss to more vulnerable parties) is found, particularly when interlinkag es are combined. The market structures described appear to emerge not from government intervention but from the uneven distribution of local power, and are thus unlikely to be improved by structural adjustment reforms or by price-focused policies.