IDEAS home Printed from https://ideas.repec.org/p/ags/iaae18/275869.html
   My bibliography  Save this paper

The Absence of Dynamic Gains from Free Trade in Agriculture: Implications for the Governance of Agricultural Trade and Development

Author

Listed:
  • Moon, W.
  • Pino, G.

Abstract

This study draws upon research in economics and agricultural economics to demonstrate that free trade in agriculture is not poised to bring about dynamic/productivity gains. That is in contrast to the mounting evidence of dynamic/productivity gains (in addition to the static gains) from free trade in manufacturing industries/firms. We show that the lack of the dynamic gains from agricultural trade is due to the passivity of farm producers in determining their productivity and international competitiveness. It is highlighted that it is neither free trade nor greater competitive pressure on farm producers but public investments for R&D/infrastructure/extension that would bring about improvements in productivity over time. Implications of the lack of the dynamic gains are discussed for governing agricultural trade and designing development strategies in food-importing low income countries.

Suggested Citation

  • Moon, W. & Pino, G., 2018. "The Absence of Dynamic Gains from Free Trade in Agriculture: Implications for the Governance of Agricultural Trade and Development," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 275869, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae18:275869
    DOI: 10.22004/ag.econ.275869
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/275869/files/2669.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.275869?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Andrew B. Bernard & J. Bradford Jensen & Stephen J. Redding & Peter K. Schott, 2007. "Firms in International Trade," Journal of Economic Perspectives, American Economic Association, vol. 21(3), pages 105-130, Summer.
    2. Anderson, James & Larch, Mario & Yotov, Yoto, 2015. "Growth and Trade with Frictions: A Structural Estimation Framework," School of Economics Working Paper Series 2015-2, LeBow College of Business, Drexel University.
    3. Thirtle, Colin & Lin, Lin & Piesse, Jenifer, 2003. "The Impact of Research-Led Agricultural Productivity Growth on Poverty Reduction in Africa, Asia and Latin America," World Development, Elsevier, vol. 31(12), pages 1959-1975, December.
    4. Marc J. Melitz & Daniel Trefler, 2012. "Gains from Trade When Firms Matter," Journal of Economic Perspectives, American Economic Association, vol. 26(2), pages 91-118, Spring.
    5. Chun Kwon Yoo & Munisamy Gopinath & Hanho Kim, 2012. "Trade Policy Reform, Productivity Growth and Welfare in South Korean Agriculture," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 34(3), pages 472-488.
    6. Nina Pavcnik, 2002. "Trade Liberalization, Exit, and Productivity Improvements: Evidence from Chilean Plants," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 69(1), pages 245-276.
    7. Hans P. Binswanger & Klaus Deininger, 1997. "Explaining Agricultural and Agrarian Policies in Developing Countries," Journal of Economic Literature, American Economic Association, vol. 35(4), pages 1958-2005, December.
    8. Lileeva, Alla, 2008. "Trade Liberalization and Productivity Dynamics: Evidence from Canada," Economic Analysis (EA) Research Paper Series 2008051e, Statistics Canada, Analytical Studies Branch.
    9. 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.
    10. Joel Bergsman, 1974. "Commercial Policy, Allocative Efficiency, and "X-Efficiency"," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 88(3), pages 409-433.
    11. Keith O. Fuglie & Andrew A. Toole, 2014. "The Evolving Institutional Structure of Public and Private Agricultural Research," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 96(3), pages 862-883.
    12. Fan, Shenggan & Pardey, Philip G., 1997. "Research, productivity, and output growth in Chinese agriculture," Journal of Development Economics, Elsevier, vol. 53(1), pages 115-137, June.
    13. Moon, Wanki, 2011. "Is agriculture compatible with free trade?," Ecological Economics, Elsevier, vol. 71(C), pages 13-24.
    14. Tasso Adamopoulos, 2011. "Transportation Costs, Agricultural Productivity, And Cross‐Country Income Differences," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 52(2), pages 489-521, May.
    15. Alla Lileeva & Daniel Trefler, 2010. "Improved Access to Foreign Markets Raises Plant-level Productivity…For Some Plants," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 125(3), pages 1051-1099.
    16. Evenson, Robert E., 2001. "Economic impacts of agricultural research and extension," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 11, pages 573-628, Elsevier.
    17. Kym Anderson, 2009. "Krueger/Schiff/Valdes Revisited: Agricultural Price and Trade Policy Reform in Developing Countries since the 1980s," School of Economics and Public Policy Working Papers 2009-22, University of Adelaide, School of Economics and Public Policy.
    18. Timmer, C. Peter, 2002. "Agriculture and economic development," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 2, chapter 29, pages 1487-1546, Elsevier.
    19. Derek Headey & Mohammad Alauddin & D.S. Prasada Rao, 2010. "Explaining agricultural productivity growth: an international perspective," Agricultural Economics, International Association of Agricultural Economists, vol. 41(1), pages 1-14, January.
    20. Douglas Gollin & David Lagakos & Michael E. Waugh, 2014. "The Agricultural Productivity Gap," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(2), pages 939-993.
    21. Yoto Yotov & Mario Larch & James Anderson, 2015. "Growth and Trade: A Structural Estimation Framework," 2015 Meeting Papers 851, Society for Economic Dynamics.
    22. Kym Anderson, 2010. "Krueger, Schiff, and Valdés Revisited: Agricultural Price and Trade Policy Reform in Developing Countries since 1960," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 32(2), pages 195-231.
    23. L Alan Winters, 2004. "Trade Liberalisation and Economic Performance: An Overview," Economic Journal, Royal Economic Society, vol. 114(493), pages 4-21, February.
    24. Mary Amiti & Jozef Konings, 2007. "Trade Liberalization, Intermediate Inputs, and Productivity: Evidence from Indonesia," American Economic Review, American Economic Association, vol. 97(5), pages 1611-1638, December.
    25. Laure Latruffe, 2010. "Competitiveness, Productivity and Efficiency in the Agricultural and Agri-Food Sectors," OECD Food, Agriculture and Fisheries Papers 30, OECD Publishing.
    26. Huffman, Wallace & Evenson, Robert E., 2001. "Structural Adjustment and Productivity Change in U.S. Agriculture, 1950-82," Staff General Research Papers Archive 5009, Iowa State University, Department of Economics.
    27. Alla Lileeva, 2008. "Trade liberalization and productivity dynamics: evidence from Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 41(2), pages 360-390, May.
    28. Andrew B. Bernard, 2004. "Exporting and Productivity in the USA," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 20(3), pages 343-357, Autumn.
    29. Kym Anderson & John Cockburn & Will Martin, 2010. "Agricultural Price Distortions, Inequality, and Poverty," World Bank Publications - Books, The World Bank Group, number 2430, December.
    30. Gardner, Bruce L, 1992. "Changing Economic Perspectives on the Farm Problem," Journal of Economic Literature, American Economic Association, vol. 30(1), pages 62-101, March.
    31. David Hadley, 2006. "Patterns in Technical Efficiency and Technical Change at the Farm‐level in England and Wales, 1982–2002," Journal of Agricultural Economics, Wiley Blackwell, vol. 57(1), pages 81-100, March.
    32. Elbadawi, I.A., 1989. "Terms Of Trade, Commercial Policy, And The Black Market For Foreign Exchange: An Empirical Model Of Real Exchange Rate Determination," Papers 570, Yale - Economic Growth Center.
    33. Alla Lileeva, 2008. "Trade liberalization and productivity dynamics: evidence from Canada," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 41(2), pages 360-390, May.
    34. Krugman, Paul R., 1979. "Increasing returns, monopolistic competition, and international trade," Journal of International Economics, Elsevier, vol. 9(4), pages 469-479, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Moon, Wanki, 2018. "The Lack of Dynamic Gains from Trade in Agriculture: Implications for Governing Agricultural Trade," 2018 Annual Meeting, February 2-6, 2018, Jacksonville, Florida 266613, Southern Agricultural Economics Association.
    2. Rutzer, Christian, 2014. "A Theory of Trade Liberalization and Innovations with Heterogeneous Firms," Working papers 2014/02, Faculty of Business and Economics - University of Basel.
    3. Ben Tomlin & Loretta Fung, 2015. "Exchange Rate Movements and the Distribution of Productivity," Review of International Economics, Wiley Blackwell, vol. 23(4), pages 782-809, September.
    4. Piera Bello & Vincenzo Galasso, 2020. "Old before their time: the role of employers in retirement decisions," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(5), pages 1198-1223, October.
    5. Kishi, Keiichi & Okada, Keisuke, 2018. "Trade Liberalization, Technology Diffusion, and Productivity," MPRA Paper 88597, University Library of Munich, Germany.
    6. Hsieh, Chang-Tai & Li, Nicholas & Ossa, Ralph & Yang, Mu-Jeung, 2020. "Accounting for the new gains from trade liberalization," Journal of International Economics, Elsevier, vol. 127(C).
    7. Kishi, Keiichi & Okada, Keisuke, 2021. "The impact of trade liberalization on productivity distribution under the presence of technology diffusion and innovation," Journal of International Economics, Elsevier, vol. 128(C).
    8. Hu, Xiaotian & Yin, Xiaopeng, 2022. "Do stronger intellectual property rights protections raise productivity within the context of trade liberalization? Evidence from China," Economic Modelling, Elsevier, vol. 110(C).
    9. Chang-Tai Hsieh & Nicholas Li & Ralph Ossa & Mu-Jeung Yang, 2016. "Gains from Trade with Flexible Extensive Margin Adjustment," NBER Working Papers 22069, National Bureau of Economic Research, Inc.
    10. Rigby, David L. & Kemeny, Thomas & Cooke, Abigail, 2017. "Plant exit and U.S. imports from low-wage countries," International Economics, Elsevier, vol. 149(C), pages 27-40.
    11. Movahedi, Mohammad, 2013. "Le commerce international, l’adoption de l’innovation et le choix de l’entrée-sortie à l’exportation des firmes [International trade, innovation adoption and export entry-exit choice of the firms]," MPRA Paper 44268, University Library of Munich, Germany, revised 01 Jan 2014.
    12. Hsieh, Chang-Tai & Li, Nicholas & Ossa, Ralph & Yang, Mu-Jeung, 2023. "Gains from trade liberalization with flexible extensive margin adjustment," Journal of International Economics, Elsevier, vol. 142(C).
    13. Baccini, Leonardo & Impullitti, Giammario & Malesky, Edmund J., 2019. "Globalization and state capitalism: Assessing Vietnam's accession to the WTO," Journal of International Economics, Elsevier, vol. 119(C), pages 75-92.
    14. Olivier Cadot & Céline Carrère & Vanessa Strauss-Kahn, 2013. "Trade Diversification, Income, And Growth: What Do We Know?," Journal of Economic Surveys, Wiley Blackwell, vol. 27(4), pages 790-812, September.
    15. Maria Bas & Vanessa Strauss-Kahn, 2014. "Does importing more inputs raise exports? Firm-level evidence from France," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 150(2), pages 241-275, May.
    16. Ulf Lewrick & Lukas Mohler & Rolf Weder, 2014. "When firms and industries matter: understanding the sources of productivity growth," BIS Working Papers 469, Bank for International Settlements.
    17. Jan De Loecker & Johannes Van Biesebroeck, 2016. "Effect of International Competition on Firm Productivity and Market Power," NBER Working Papers 21994, National Bureau of Economic Research, Inc.
    18. Jože Damijan & Jozef Konings & Sašo Polanec, 2013. "Pass-on trade: why do firms simultaneously engage in two-way trade in the same varieties?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 149(1), pages 85-111, March.
    19. Fontanelli, Luca & Guerini, Mattia & Napoletano, Mauro, 2023. "International trade and technological competition in markets with dynamic increasing returns," Journal of Economic Dynamics and Control, Elsevier, vol. 149(C).
    20. David Kohn & Fernando Leibovici & Michal Szkup, 2023. "No Credit, No Gain: Trade Liberalization Dynamics, Production Inputs, And Financial Development," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 64(2), pages 809-836, May.

    More about this item

    Keywords

    Agricultural and Food Policy; International Relations/Trade;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:iaae18:275869. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/iaaeeea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.