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How Do Agricultural Policy Restrictions to Global Trade and Welfare Differ Across Commodities?

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  • Anderson, Kym
  • Croser, Johanna L.
  • Lloyd, Peter J

Abstract

For decades the world’s agricultural markets have been highly distorted by national government policies, but very differently for different commodities. Hence a weighted average across countries of nominal rates of assistance or consumer tax equivalents for a product can be misleading as an indicator of the trade or welfare effects of policies affecting that product’s global market. This is especially the case when some countries tax and others subsidize its production or consumption. This article develops a new set of more-satisfactory indicators for that purpose, drawing on the recent literature on trade restrictiveness indexes. It then exploits a global agricultural distortions database recently compiled by the World Bank to generate the first set of estimates of those two indicators for each of 28 key agricultural commodities from 1960 to 2004, based on a sample of 75 countries that together account for more than three-quarters of the world’s production of those agricultural commodities. These reveal the considerable extent of reforms in agricultural policies of developing as well as high-income countries over the past two decades.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 7230.

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Date of creation: Mar 2009
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Handle: RePEc:cpr:ceprdp:7230

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Keywords: agricultural price and trade policies; Distorted commodity markets; trade restrictiveness index;

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References

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  1. Feenstra, Robert C., 1995. "Estimating the effects of trade policy," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 30, pages 1553-1595 Elsevier.
  2. Lloyd, Peter J. & Croser, Johanna L. & Anderson, Kym, 2009. "Global Distortions to Agricultural Markets: New Indicators of Trade and Welfare Impacts, 1955 to 2007," 2009 Conference (53rd), February 11-13, 2009, Cairns, Australia 48049, Australian Agricultural and Resource Economics Society.
  3. Kym Anderson & Will Martin, 2009. "Distortions to Agricultural Incentives in Asia," World Bank Publications, The World Bank, number 2611, October.
  4. Anderson, Kym & Kurzweil, Marianne & Martin, Will & Sandri, Damiano & Valenzuela, Ernesto, 2008. "Measuring Distortions to Agricultural Incentives, Revisited," CEPR Discussion Papers 6924, C.E.P.R. Discussion Papers.
  5. Valdés, Alberto & Zietz, Joachim A., 1980. "Agricultural protection in OECD countries: its cost to less-developed countries," Research reports 21, International Food Policy Research Institute (IFPRI).
  6. Hiau Looi Kee & Alessandro Nicita & Marcelo Olarreaga, 2008. "Import Demand Elasticities and Trade Distortions," The Review of Economics and Statistics, MIT Press, vol. 90(4), pages 666-682, November.
  7. Kee, Hiau Looi & Nicita, Alessandro & Olarreaga, Marcelo, 2006. "Estimating Trade Restrictiveness Indices," CEPR Discussion Papers 5576, C.E.P.R. Discussion Papers.
  8. Anderson, James E. & Bannister, Geoffrey, 1992. "The trade restrictiveness index : an application to Mexican agriculture," Policy Research Working Paper Series 874, The World Bank.
  9. James E. Anderson & J. Peter Neary, 2005. "Measuring the Restrictiveness of International Trade Policy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262012200, December.
  10. Valenzuela, Ernesto & Wong, Sara & Sandri, Damiano, 2007. "Distortions to Agricultural Incentives in Ecuador," Agricultural Distortions Working Paper 48394, World Bank.
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Cited by:
  1. Lloyd, Peter J. & Croser, Johanna L. & Anderson, Kym, 2009. "Global distortions to agricultural markets : new indicators of trade and welfare impacts, 1955 to 2007," Policy Research Working Paper Series 4865, The World Bank.
  2. Anderson, Kym, 2009. "Political Economy of Distortions to Agricultural Incentives: Introduction and Summary," Agricultural Distortions Working Paper 50306, World Bank.
  3. Anderson, Kym & Martin, Will & van der Mensbrugghe, Dominique, 2013. "Estimating Effects of Price-Distorting Policies Using Alternative Distortions Databases," Handbook of Computable General Equilibrium Modeling, Elsevier.
  4. Anderson, Kym & Croser, Johanna L., 2010. "Novel Indicators of the Trade and Welfare Effects of Agricultural Distortions in OECD Countries," CEPR Discussion Papers 7971, C.E.P.R. Discussion Papers.
  5. Anderson, Kym & Croser, Johanna, 2010. "How Much Do Agricultural Policies Restrict Trade? Comparing Trade Restrictiveness Indexes," World Bank - Economic Premise, The World Bank, issue 4, pages 1-7, March.

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