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Distortions to Agricultural Incentives in Australia Since World War II

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Author Info

  • Kym Anderson

    () (School of Economics, University of Adelaide)

  • Peter Lloyd

    () (University of Melbourne)

  • Donald MacLaren

    () (University of Melbourne)

Abstract

AustraliaÂ’s lacklustre economic growth performance in the first four decades following World War II was in part due to an anti-trade, anti-primary sector bias in government assistance policies. This paper provides new annual estimates of the extent of those biases since 1946 and their gradual phase-out during the past two decades. In doing so it reveals that the timing of the sectoral assistance cuts was such as sometimes to improve but sometimes to worsen the distortions to incentives faced by farmers. Also, the changes increased the variation of assistance rates within agriculture during the 1950s and 1960s, reducing the welfare contribution of those programs in that period. While the assistance pattern within agriculture appears not to have been strongly biased against exporters, its reform has coincided with a substantial increase in export orientation of many farm industries. The overall pattern for Australia is contrasted with that revealed by comparable new estimates for other high-income countries.

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Bibliographic Info

Paper provided by University of Adelaide, Centre for International Economic Studies in its series Centre for International Economic Studies Working Papers with number 2007-01.

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Length: 58 pages
Date of creation: Aug 2007
Date of revision:
Handle: RePEc:adl:cieswp:2007-01

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Keywords: Distorted incentives; manufacturing protection; agricultural assistance; trade policy reform;

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References

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  1. Dean Parham, 2004. "Sources of Australia's Productivity Revival," The Economic Record, The Economic Society of Australia, vol. 80(249), pages 239-257, 06.
  2. 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.
  3. Anonymous, 2006. "Rural Water Use and the Environment: The Role of Market Mechanisms," Commissioned Studies 8020, Productivity Commission.
  4. H. W. Arndt, 1965. "Australia‐Developed, Developing Of Midway?1," The Economic Record, The Economic Society of Australia, vol. 41(95), pages 318-340, 09.
  5. Stephan Pfaffenzeller & Paul Newbold & Anthony Rayner, 2007. "A Short Note on Updating the Grilli and Yang Commodity Price Index," World Bank Economic Review, World Bank Group, vol. 21(1), pages 151-163.
  6. Anderson, Kym & James, Sarah, 1998. "On the Need for More Economic Assessment of Quarantine/SPS Policies," CEPR Discussion Papers 1934, C.E.P.R. Discussion Papers.
  7. Productivity Commission, 2005. "Trends in Australian Agriculture," Research Papers 0502, Productivity Commission, Government of Australia.
  8. Honma, Masayoshi & Hayami, Yujiro, 2007. "Distortions to Agricultural Incentives in Korea and Taiwan," Agricultural Distortions Working Paper 48479, World Bank.
  9. Anderson, Kym & Valenzuela, Ernesto, 2006. "Do global trade distortions still harm developing country farmers ?," Policy Research Working Paper Series 3901, The World Bank.
  10. Productivity Commission, 2007. "Potential Benefits of the National Reform Agenda," Research Papers 0701, Productivity Commission, Government of Australia.
  11. Anderson, Kym & Lattimore, Ralph G. & Lloyd, Peter J. & MacLaren, Donald, 2007. "Distortions to Agricultural Incentives in Australia and New Zealand," 2007 Conference (51st), February 13-16, 2007, Queenstown, New Zealand 10407, Australian Agricultural and Resource Economics Society.
  12. Leamer, Edward E, 1987. "Paths of Development in the Three-Factor, n-Good General Equilibrium Model," Journal of Political Economy, University of Chicago Press, vol. 95(5), pages 961-99, October.
  13. Gardner, Bruce L., 2008. "Distortions to Agricultural Incentives in the United States and Canada," Agricultural Distortions Working Paper 48573, World Bank.
  14. Harris, S.F., 1964. "Some Measures Of Levels Of Protection In Australia'S Rural Industries," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 8(02), December.
  15. Anderson, Kym & Jackson, Lee Ann, 2005. "GM crop technology and trade restraints: economic implications for Australia and New Zealand," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 49(3), September.
  16. Lloyd, Peter J., 1975. "Tariff Compensation: An Undesirable Policy," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 19(03), December.
  17. Alan V. Deardorff, 1984. "An Exposition and Exploration of Krueger's Trade Model," Canadian Journal of Economics, Canadian Economics Association, vol. 17(4), pages 731-46, November.
  18. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
  19. Anderson, Kym, 1999. "The WTO Agenda for the New Millennium," The Economic Record, The Economic Society of Australia, vol. 75(228), pages 77-88, March.
  20. Kelvin Balcombe & Hristos Doucouliagos & Iain Fraser, 2007. "Input usage, output mix and industry deregulation: an analysis of the Australian dairy manufacturing industry ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 51(2), pages 137-156, 06.
  21. Richard Baldwin, 2005. "Heterogeneous Firms and Trade: Testable and Untestable Properties of the Melitz Model," NBER Working Papers 11471, National Bureau of Economic Research, Inc.
  22. McKay, D.H., 1967. "The Small-Farm Problem In Australia," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 11(02), December.
  23. Anderson, Kym, 1998. "Are resource-abundant economies disadvantaged?," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 42(1), March.
  24. Peter Forsyth, 2000. "Microeconomic Policies and Structural Change," RBA Annual Conference Volume, in: David Gruen & Sona Shrestha (ed.), The Australian Economy in the 1990s Reserve Bank of Australia.
  25. Kym Anderson & Lee Ann Jackson, 2005. "GM crop technology and trade restraints: economic implications for Australia and New Zealand ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 49(3), pages 263-281, 09.
  26. Warr, Peter G., 1978. "The Case Against Tariff Compensation," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 22(02-03).
  27. Ben Dolman & Dean Parham & Simon Zheng, 2007. "Can Australia Match US Productivity Performance?," Staff Working Papers 0703, Productivity Commission, Government of Australia.
  28. David Card & Richard B. Freeman, 2004. "What Have Two Decades of British Economic Reform Delivered?," NBER Chapters, in: Seeking a Premier Economy: The Economic Effects of British Economic Reforms, 1980-2000, pages 9-62 National Bureau of Economic Research, Inc.
  29. repec:rus:hseeco:122439 is not listed on IDEAS
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  32. S.F. Harris, 1964. "Some Measures Of Levels Of Protection In Australia'S Rural Industries," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 8(2), pages 124-144, December.
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Citations

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Cited by:
  1. Anderson, Kym & Kurzweil, Marianne & Martin, Will & Sandri, Damiano & Valenzuela, Ernesto, 2008. "Measuring distortions to agricultural incentives, revisited," Policy Research Working Paper Series 4612, The World Bank.
  2. Anderson, Kym, 2012. "Agricultural Price Distortions: Trends and Volatility, Past and Prospective," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 125692, International Association of Agricultural Economists.
  3. MacLaren, Donald & Lloyd, Peter J., 2008. "Measuring assistance to the agricultural industry in Australia using a Production Assistance Index," 2008 Conference (52nd), February 5-8, 2008, Canberra, Australia 6033, Australian Agricultural and Resource Economics Society.
  4. Anderson, Kym & Rausser, Gordon & Swinnen, Johan, 2012. "Political Economy of Public Policies: Insights from Distortions to Agricultural and Food Markets," CEPR Discussion Papers 9221, C.E.P.R. Discussion Papers.
  5. Anderson, Kym & Croser, Johanna L. & Sandri, Damiano & Valenzuela, Ernesto, 2009. "Agricultural Distortion Patterns Since the 1950s: What Needs Explaining?," Agricultural Distortions Working Paper 50305, World Bank.
  6. Herault, Nicolas & Thurlow, James, 2009. "Agricultural Distortions, Poverty and Inequality in South Africa," Agricultural Distortions Working Paper 52792, World Bank.
  7. Anderson, Kym & Lattimore, Ralph G. & Lloyd, Peter J. & MacLaren, Donald, 2008. "Distortions to Agricultural Incentives in Australia and New Zealand," Agricultural Distortions Working Paper 48387, World Bank.
  8. Kym Anderson & Will Martin & Dominique van der Mensbrugghe, 2007. "China, the WTO, and the Doha Agenda," Centre for International Economic Studies Working Papers 2007-02, University of Adelaide, Centre for International Economic Studies.
  9. Demirdöğen, Alper, 2011. "Tarımsal Korumacılık, Korumacılığın Ölçümü ve Türkiye
    [Agricultural Protectionism, Its Measurement and Turkey]    ," MPRA Paper 35083, University Library of Munich, Germany.
  10. Kym Anderson & James Giesecke & Ernesto Valenzuela, 2008. "How would global trade liberalization affect rural and regional incomes in Australia?," Centre of Policy Studies/IMPACT Centre Working Papers g-176, Monash University, Centre of Policy Studies/IMPACT Centre.
  11. Anderson, Kym, 2009. "Political Economy of Distortions to Agricultural Incentives: Introduction and Summary," Agricultural Distortions Working Paper 50306, World Bank.

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