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Agriculture in the Age of Globalization

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  • Romano, Donato
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    Abstract

    This paper aims at analyzing the asymmetries in the process of globalization and its differentiated outcomes on (i) developed and less developed countries, and (ii) on LDC agriculture. The consequences of these asymmetries are reflected in the dramatic changes in world agricultural trade – an unprecedented growth of agricultural trade in real terms and a dramatic change in its composition which is increasingly moving away from bulk commodities towards high-value, processed consumer-ready agricultural goods. The impacts of these changes on LDC agriculture have been quite differentiated, with most countries experiencing a worsening of their agricultural trade balance. This change of the LDC trade position is counterintuitive if we still think of agricultural trade as a comparative-advantage-based trade, i.e. based on cost competition. It seems instead that the change in the composition of agricultural trade is the epiphenomenon of a fundamental change in the rules of the game, which are increasingly based on the reputation of agricultural products and imply a quality-based competition. Unfortunately, the implications for LDC agriculture do not seem encouraging. The intrinsic poverty of these economies, with the implied burden in terms of missing assets to compete under the new rules of the game and some adverse globalization-induced changes in LDCs macro fundamentals, are crucial handicaps that work against the development of LDC agriculture. Furthermore, the underlying forces driving globalization (increasing returns to scale, research, development of new products, etc.) undermine the traditional role of agriculture as engine of growth. The analysis carried out in this paper represents one more piece of evidence that the effects of globalization are asymmetric and that development success requires selective and phased integration with world markets. Without the required investments in terms of infrastructure, institutions, human and social capital, LDC agriculture will hardly be able to claim the expected benefits of globalization.

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    Bibliographic Info

    Paper provided by International Association of Agricultural Economists in its series 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia with number 25253.

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    Date of creation: 2006
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    Handle: RePEc:ags:iaae06:25253

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    Related research

    Keywords: globalization; agriculture; LDCs; International Relations/Trade; O13; Q17;

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    1. Parsley, David & Wei, Shang-Jin, 2001. "Limiting Currency Volatility to Stimulate Goods Market Integration: a Price-Based Approach," CEPR Discussion Papers 2958, C.E.P.R. Discussion Papers.
    2. Jan Dehn, 2000. "Commodity price uncertainty in developing countries," CSAE Working Paper Series 2000-12, Centre for the Study of African Economies, University of Oxford.
    3. Baier, Scott L. & Bergstrand, Jeffrey H., 2001. "The growth of world trade: tariffs, transport costs, and income similarity," Journal of International Economics, Elsevier, vol. 53(1), pages 1-27, February.
    4. Dehn, Jan, 2000. "Commodity price uncertainty in developing countries," Policy Research Working Paper Series 2426, The World Bank.
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    6. Robert C. Feenstra, . "Integration Of Trade And Disintegration Of Production In The Global Economy," Department of Economics 98-06, California Davis - Department of Economics.
    7. Yasuyuki Sawada & Pan A. Yotopoulos, 2006. "Growth and Poverty Reduction Under Globalization: The Systematic Impact of Exchange Rate Misalignment," Discussion Papers 06-014, Stanford Institute for Economic Policy Research.
    8. Warren, Tony & Gary Clyde Hufbauer & Erika Wada, 2002. "Benefits of Price Convergence: Speculative Calculations, The," Peterson Institute Press: All Books, Peterson Institute for International Economics, number pa65.
    9. Pingali, P. L. & Traxler, G., 2002. "Changing locus of agricultural research: will the poor benefit from biotechnology and privatization trends?," Food Policy, Elsevier, vol. 27(3), pages 223-238, June.
    10. Javier Le�N & Raimundo Soto, 1997. "Structural Breaks And Long-Run Trends In Commodity Prices," Journal of International Development, John Wiley & Sons, Ltd., vol. 9(3), pages 347-366.
    11. David C. Parsley & Shang-Jin Wei, 2001. "Limiting Currency Volatility to Stimulate Goods Market Integration," IMF Working Papers 01/197, International Monetary Fund.
    12. Kolleen Rask & Norman Rask, 2004. "Transition Economies and Globalization: Food System Asymmetries on the Path to Free Markets," Working Papers 0410, College of the Holy Cross, Department of Economics.
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