oecd countries on developing economies' exports, imports, and welfare. Developing economy exporters are likely to benefit from reductions in such subsidies and trade barriers, whereas net importers may lose as world prices rise. A simple partial equilibrium model of global trade in commodities that benefit from domestic support or export subsidies is developed to estimate the relevant elasticities. Simulation results suggest that a 50 percent reduction in border protection will have a much larger positive impact on developing economies' exports and welfare than a 50 percent reduction in agricultural subsidies. Although there is significant heterogeneity across developing economies, the results suggest that efforts in the Doha Round of wto negotiations should be directed at substantially reducing border protection. Copyright 2004, Oxford University Press.">

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Agricultural Tariffs or Subsidies: Which Are More Important for Developing Economies?

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Author Info
Bernard Hoekman
Francis Ng
Marcelo Olarreaga

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Abstract

This article assesses the impact of the world price--depressing effect of agricultural subsidies and border protection in oecd countries on developing economies' exports, imports, and welfare. Developing economy exporters are likely to benefit from reductions in such subsidies and trade barriers, whereas net importers may lose as world prices rise. A simple partial equilibrium model of global trade in commodities that benefit from domestic support or export subsidies is developed to estimate the relevant elasticities. Simulation results suggest that a 50 percent reduction in border protection will have a much larger positive impact on developing economies' exports and welfare than a 50 percent reduction in agricultural subsidies. Although there is significant heterogeneity across developing economies, the results suggest that efforts in the Doha Round of wto negotiations should be directed at substantially reducing border protection. Copyright 2004, Oxford University Press.

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Article provided by Oxford University Press in its journal The World Bank Economic Review.

Volume (Year): 18 (2004)
Issue (Month): 2 ()
Pages: 175-204
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Handle: RePEc:oup:wbecrv:v:18:y:2004:i:2:p:175-204

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  1. Kee, Hiau Looi & Nicita, Alessandro & Olarreaga, Marcelo, 2006. "Estimating trade restrictiveness indices," Policy Research Working Paper Series 3840, The World Bank. [Downloadable!]
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  2. Anderson, Kym & Martin, Will & van der Mensbrugghe, Dominique, 2005. "Doha Merchandise Trade Reform: What’s at Stake for Developing Countries?," CEPR Discussion Papers 5156, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  3. Gawande, Kishore & Hoekman, Bernard, 2006. "Lobbying and agricultural trade policy in the United States," Policy Research Working Paper Series 3819, The World Bank. [Downloadable!]
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  4. Surabhi Mittal, 2007. "OECD Agricultural Trade Reforms Impact on India's Prices and Producers Welfare," Indian Council for Research on International Economic Relations, New Delhi Working Papers 195, Indian Council for Research on International Economic Relations, New Delhi, India. [Downloadable!]
  5. John C. Beghin, 2005. "Dairy Markets in Asia: An Overview of Recent Findings and Implications," Food and Agricultural Policy Research Institute (FAPRI) Publications 05-bp47, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University. [Downloadable!]
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  6. Anderson, Kym & Martin, Will & Valenzuela, Ernesto, 2006. "The relative importance of global agricultural subsidies and market access," Policy Research Working Paper Series 3900, The World Bank. [Downloadable!]
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  7. Anderson, Kym & Martin, Will & van der Mensbrugghe, Dominique, 2005. "Would multilateral trade reform benefit Sub-Saharan Africans?," Policy Research Working Paper Series 3616, The World Bank. [Downloadable!]
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  8. Hart, Chad E. & Beghin, John C., 2006. "Rethinking Agricultural Domestic Support under the World Trade Organization," Staff General Research Papers 12510, Iowa State University, Department of Economics.
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  9. Keith Walsh & Martina Brockmeier & Alan Matthews, 2005. "Implications of Domestic Support Disciplines for Further Agricultural Trade Liberalization," The Institute for International Integration Studies Discussion Paper Series iiisdp99, IIIS. [Downloadable!]
  10. Anderson, Kym & Martin, Will, 2005. "Agricultural trade reform and the Doha development agenda," Policy Research Working Paper Series 3607, The World Bank. [Downloadable!]
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  11. Beghin, John C., 2006. "Evolving Dairy Markets in Asia: Recent Findings and Implications," Staff General Research Papers 12506, Iowa State University, Department of Economics. [Downloadable!]
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  12. Sebastian Hess & Stephan von Cramon-Taubadel, 2007. "Assessing General and Partial Equilibrium Simulations of Doha Round Outcomes using Meta-Analysis," Center for European, Governance and Economic Development Research (cege) Discussion Papers 67, Center for European, Governance and Economic Development Research, University of Goettingen (Germany).. [Downloadable!]
  13. Anderson, Kym & Martin, Will & van der Mensbrugghe, Dominique, 2005. "Distortions to world trade: impacts on agricultural markets and farm incomes," Policy Research Working Paper Series 3736, The World Bank. [Downloadable!]
    Other versions:
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