Displaced Distortions : Financial Market Failures and Seemingly Inefficient Resource Allocation in Low-Income Rural Communities

This brief enumerates some of the many ways displaced distortions occur in rural Africa. It is important that analysts and policymakers understand the phenomenon of displaced distortions when they observe seemingly irrational behavior in factor or product markets, or in patterns of natural resources exploitation or technology adoption. Appropriate policy responses may not be an intervention directly in the distorted market. Instead, the best response may be to resolve the financial market failures that are the root causes of the seemingly inefficient resource allocation