Relationships and traders in Madagascar

This article documents the role that personal relationships play in economi c exchange. Original survey data show that agricultural traders in Madagasc ar perceive relationships as the most important factor for success in their business. Evidence details the extent to which relationships are used to s erve a variety of purposes such as: the circulation of information about pr ices and market conditions; the provision of trade credit; the prevention a nd handling of contractual difficulties; the regularity of trade flows: and the mitigation of risk. Of these, the regularity of supply and demand and the sharing of risk appear particularly important. Larger and more prospero us traders are those with quantitatively and qualitatively better relations hips. Family plays little role in business beyond assistance at start-up.