Are The Poverty Effects of Trade Policies Invisible?
AbstractBeginning with the WTO's Doha Development Agenda and establishment of the Millennium Development Goal of reducing poverty by 50 percent by 2015, poverty impacts of trade reforms have become central to the global development agenda. This has been particularly true of agricultural trade reforms due to the importance of grains in the diets of the poor, presence of relatively higher protection in agriculture, as well as heavy concentration of global poverty in rural areas where agriculture is the main source of income. Yet some in this debate have argued that, given the extreme volatility in agricultural commodity markets, the additional price and therefore poverty impacts due to trade liberalization might well be indiscernible. This paper formally tests the “invisibility hypothesis” using the method of stochastic simulation in a trade-poverty modeling framework. The hypothesis test is based on the comparison of two samples of price and poverty distributions. The first originates solely from the inherent variability in global staple grains markets, while the second combines the effects of inherent market variability with those of trade reform in these same markets. Results, at the national and stratum level indicate that the short-run poverty impacts of full trade liberalization in staple grains trade worldwide, are distinguishable in only four of the fifteen countries, suggesting that impacts of more modest agricultural trade reforms are indeed likely to be invisible in short run. Countries that show statistically significant short run impacts are the ones characterized by high staple grains tariffs and/or a moderate degree of grain markets variability. Within each country, results are heterogeneous. In two thirds of the sample countries, agriculturally self-employed poor experience statistically significant poverty impacts from trade liberalization. However, this figure is under a third for all the other strata. Copyright , Oxford University Press.
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Bibliographic InfoArticle provided by World Bank Group in its journal The World Bank Economic Review.
Volume (Year): 25 (2011)
Issue (Month): 2 (May)
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Other versions of this item:
- Verma, Monika & Valenzuela, Ernesto & Hertel, Thomas W., 2010. "Are The Poverty Effects of Trade Policies Invisible?," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61793, Agricultural and Applied Economics Association.
- Monika Verma & Thomas Hertel & Ernesto Valenzuela, 2011. "Are the Poverty Effects of Trade Policies Invisible?," School of Economics Working Papers 2011-14, University of Adelaide, School of Economics.
- C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
- C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
- F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
- I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
- Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
- R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General
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