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Liberalising Trade in the Agriculture Sector of a Small Island State: The Case of Fiji

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  • John Asafu‐Adjaye

Abstract

This paper uses Fiji as a case study to investigate the impacts of three trade liberalisation policies – removal of sugar price subsidies, unilateral trade liberalisation and multilateral trade liberalisation, implied by the successful completion of the Doha Round. Removal of the sugar price subsidies has an adverse effect on real output, real national welfare and employment, but promotes growth of non‐agricultural exports in the long run. Unilateral trade liberalisation, in the form of tariff cuts in the agricultural sector, increases real output, real national welfare and non‐agricultural exports in the medium term. However, this growth is not sustained in the long term. The best outcome for Fiji is multilateral trade liberalisation which increases real output, real national welfare, non‐agricultural exports and employment. It is argued that reform of trade policies in less developed countries could come at a cost, therefore highlighting the need for compensating mechanisms to deal with the adverse impacts. Other measures to assist farmers to expand output in response to a rise in prices could include measures to reduce transport, storage and packaging costs, as well as institutional measures to enhance the functioning of input and factor markets.

Suggested Citation

  • John Asafu‐Adjaye, 2007. "Liberalising Trade in the Agriculture Sector of a Small Island State: The Case of Fiji," The World Economy, Wiley Blackwell, vol. 30(10), pages 1550-1567, October.
    • Handle: RePEc:bla:worlde:v:30:y:2007:i:10:p:1550-1567
    DOI: 10.1111/j.1467-9701.2007.01033.x
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    References listed on IDEAS

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    1. Lee, Jong-Wha, 1995. "Capital goods imports and long-run growth," Journal of Development Economics, Elsevier, vol. 48(1), pages 91-110, October.
    2. Will Martin & Kym Anderson, 2006. "Agricultural Trade Reform and the Doha Development Agenda," World Bank Publications - Books, The World Bank Group, number 6889, December.
    3. Stephen N. Karingi & Romain Perez & Hakim Ben Hammouda, 2007. "Could Extended Preferences Reward Sub‐Saharan Africa's Participation in the Doha Round Negotiations?," The World Economy, Wiley Blackwell, vol. 30(3), pages 383-404, March.
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    Cited by:

    1. Acharya, Sanjaya, 2011. "Making unilateral trade liberalisation beneficial to the poor," Socio-Economic Planning Sciences, Elsevier, vol. 45(2), pages 60-71, June.
    2. Azmat Gani, 2010. "Some Aspects of Trade between Australia and Pacific Island Countries," The World Economy, Wiley Blackwell, vol. 33(1), pages 89-106, January.

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