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Understanding the Determinants of Structural Change in World Food Markets

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  • Thomas W. Hertel
  • Zhi Wang
  • Wusheng Yu

Abstract

American Journal of Agricultural Economics, 80(December):1052-1062. This study assesses the interaction between climate change and agricultural trade policies. We distinguish between two dimensions of agricultural trade policy: market insulation and subsidy levels. Building on the previous work of Tsigas, Frisvold and Kuhn (1997) we find that, in the presence of current levels of agricultural subsidies, increased price transmission --as called for under the Uruguay Round Agreement on Agriculture-- reduces global welfare in the wake of climate change. This is due to the positive correlation between productivity changes and current levels of agricultural support. Increases in subsidized output under climate change tend to exacerbate inefficiencies in the global agricultural economy in the absence of market insulation. However, once agricultural subsidies have also been eliminated, price transmission via the global trading system contributes positively to economic adaptation under climate change. products. This may partially explain the relatively slow growth of world grain import demand in recent years. In addition, bilateral agreements with East Asia, NAFTA, and the evolution of the CAP, have all had important impacts on the structure of world food and agricultural trade. The objective of this paper is to assess the relative role of each of the major forces-- consumer demand, factor accumulation, transport costs, and policy change--in driving changes in the composition of world food trade in 1980-1995. To do so, we employ a modified version of the Global Trade Analysis Project (GTAP) model of world trade which permits us to isolate the contribution of each of these related factors to the changing composition of world food trade in a general equilibrium context. We evaluate the relative role of each of these factors by simulating the model backwards in time, from 1995 to 1980 under different assumptions. This general approach, termed “backcasting” (i.e. backwards

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Bibliographic Info

Article provided by Agricultural and Applied Economics Association in its journal American Journal of Agricultural Economics.

Volume (Year): 80 (1998)
Issue (Month): 5 ()
Pages: 1051-1061

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Handle: RePEc:oup:ajagec:v:80:y:1998:i:5:p:1051-1061

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Cited by:
  1. Blank, Steven C., 2001. "Globalization, Cropping Choices, And Profitability In American Agriculture," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 33(02), August.
  2. Steven C. Blank, 2002. "A Portfolio Of Threats To American Agriculture," Contemporary Economic Policy, Western Economic Association International, vol. 20(4), pages 381-393, October.
  3. Ron Duncan & Qun Shi & Rod Tyers, 2004. "Demographic Change and Demand for Food in Australia," ANU Working Papers in Economics and Econometrics 2004-441, Australian National University, College of Business and Economics, School of Economics.
  4. Ludena, Carlos E., 2004. "Impact Of Productivity Growth In Crops And Livestock On World Food Trade Patterns," 2004 Annual meeting, August 1-4, Denver, CO 20366, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  5. Nin Pratt, Alejandro & Hertel, Thomas W. & Foster, Kenneth A. & Rae, Allan N., 2001. "Productivity Growth And Catching-Up: Implications For China'S Trade In Livestock Products," 2001 Annual meeting, August 5-8, Chicago, IL 20590, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  6. Gehlhar, Mark J. & Dohlman, Erik, 2006. "Macroeconomic and Global Growth Influences on the U.S. Agricultural Trade Balance," 2006 Annual meeting, July 23-26, Long Beach, CA 21324, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  7. Alan A. Powell & Keith R. McLaren & K.R. Pearson & Maureen Rimmer, 2002. "Cobb-Douglas Utility - Eventually!," Monash Econometrics and Business Statistics Working Papers 12/02, Monash University, Department of Econometrics and Business Statistics.
  8. Gehlhar, Mark J. & Dohlman, Erik & Brooks, Nora & Jerardo, Alberto & Vollrath, Thomas L., 2007. "Global Growth, Macroeconomic Change, and U.S. Agricultural Trade," Economic Research Report 55963, United States Department of Agriculture, Economic Research Service.
  9. Yu, Wusheng & Hertel, Thomas W. & Preckel, Paul V. & Eales, James S., 2004. "Projecting world food demand using alternative demand systems," Economic Modelling, Elsevier, vol. 21(1), pages 99-129, January.
  10. Donatella Baiardi & Carluccio Bianchi & Eleonora Lorenzini, 2013. "Food Competition In World Markets: Some Evidence From A Panel Data Analysis Of Top Exporting Countries," DEM Working Papers Series 060, University of Pavia, Department of Economics and Management.
  11. van Berkum, Siemen & van Meijl, Hans, 2000. "The application of trade and growth theories to agriculture: a survey," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 44(4), December.
  12. Romano, Donato, 2006. "Agriculture in the Age of Globalization," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25253, International Association of Agricultural Economists.
  13. Devadoss, Stephen, 1998. "Importance Of The Processed Food Sector For The U.S. Agricultural Industry," Trade Research Center Research Discussion Papers 29246, Montana State University, Department of Agricultural Economics and Economics.
  14. Nin, Alejandro & Hertel, Thomas W. & Foster, Kenneth & Rae, Allan, 2004. "Productivity growth, catching-up and uncertainty in China's meat trade," Agricultural Economics, Blackwell, vol. 31(1), pages 1-16, July.
  15. Gopinath, Munisamy & Carver, Jason, 2002. "Total Factor Productivity And Processed Food Trade: A Cross-Country Analysis," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 27(02), December.
  16. Graham, Brett & Tyers, Rodney, 2002. "Global Population Forecast Errors, Economic Performance and Food Demand: Preliminary Simulations," 2002 Conference (46th), February 13-15, 2002, Canberra 125091, Australian Agricultural and Resource Economics Society.
  17. Marchant, Mary A. & Kumar, Sanjeev, 2004. "Demand Determinants For U.S. Processed Food Exports By Emerging/Low And Middle-Income Countries," 2004 Annual meeting, August 1-4, Denver, CO 20276, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  18. Jaakko Kiander & Risto Vaittinen & Tiiu Paas, 2002. "The Eastern Enlargement of the Eurozone and Labour Market Adjustment," Eastward Enlargement of the Euro-zone Working Papers wp06, Free University Berlin, Jean Monnet Centre of Excellence, revised 01 Aug 2002.
  19. Domingues, Edson P. & Haddad, Eduardo A. & Hewings, Geoffrey, 2008. "Sensitivity analysis in applied general equilibrium models: An empirical assessment for MERCOSUR free trade areas agreements," The Quarterly Review of Economics and Finance, Elsevier, vol. 48(2), pages 287-306, May.

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