Accepted Article 1 Public spending on agricultural productivity and rural commercialisation: A comparison of impacts using an economy-wide approach Emerta Aragie 1 and Jean Balié 2 Abstract: Motivation Many developing countries have identified a set of strategic objectives and a long-list of investment areas to promote agricultural production and ensure food security. However, most of these countries lack the financial and technical capacity to execute all of the strategic objectives and investment areas, calling for a robust comparison of their effects. Purpose Taking the case of Ethiopia as an example, this study employs an economy-wide model and assesses the relative efficiency of alternative investment options on agricultural performance and household welfare. These agricultural investment policies are evaluated under three alternative funding modalities: budget reallocation, donor financing, and tax revenue. Approach and methods To account for the linkage, and direct and indirect impacts of alternative public expenditure policies, this study adapts an economy-wide general equilibrium model for Ethiopia calibrated to a well disaggregated social accounting matrix representing the economic structure in 2010. Findings Results show that the public expenditure options examined could cause significantly different production and welfare responses. Productivity enhancing interventions such as input subsidy and irrigation development have superior output and welfare consequences, while policies aimed at small holder commercialisation such as infrastructural development aimed at cutting marketing margins have the least effect, suggesting a need to first prioritise relaxing supply constraints. This ranking of the 1 International Food Policy Research Institute (IFPRI). Corresponding author. Email: e.aragie@cgiar.org 2 International Rice Research Institute (IRRI). This article has been accepted for publication and undergone full peer review but has not been through the copyediting, typesetting, pagination and proofreading process, which may lead to differences between this version and the Version of Record. Please cite this article as doi: 10.1111/dpr.12455 This article is protected by copyright. All rights reserved.