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Distributional Effects of WTO Agricultural Reforms in Rich and Poor Countries

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Author Info
Hertel, Thomas
Keeney, Roman
Ivanic, Maros
Winters, Alan

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Abstract

Rich countries’ agricultural trade policies are the battleground on which the future of the WTO’s troubled Doha Round will be determined. Subject to widespread criticism, they nonetheless appear to be almost immune to serious reform, and one of their most common defenses is that they protect poor farmers. Our findings reject this claim. The analysis conducted here uses detailed data on farm incomes to show that major commodity programs are highly regressive in the USA, and that the only serious losses under trade reform are among large, wealthy, farmers in a few heavily protected subsectors. In contrast, analysis using household data from fifteen developing countries indicates that reforming rich countries’ agricultural trade policies would lift large numbers of developing country farm households out of poverty. In the majority of cases these gains are not outweighed by the poverty-increasing effects of higher food prices among other households. Agricultural reforms that appear feasible, even under an ambitious Doha Round, achieve only a fraction of the benefits for developing countries that full liberalization promises, but protects US large farms from most of the rigors of adjustment. Finally, the analysis conducted here indicates that maximal trade-led poverty reductions occur when developing countries participate more fully in agricultural trade liberalization.

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Paper provided by Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University in its series GTAP Working Papers with number 2185.

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Date of creation: 2006
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Handle: RePEc:gta:workpp:2185

Note: GTAP Working Paper No. 33
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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Harrison, Glenn W. & Rutherford, Thomas F. & Tarr,David & Gurgel, Angelo, 2003. "Regional, multilateral, and unilateral trade policies on MERCOSUR for growth and poverty reduction in Brazil," Policy Research Working Paper Series 3051, The World Bank. [Downloadable!]
  2. Thomas Hertel & Jeffrey Reimer, 2005. "Predicting the poverty impacts of trade reform," Journal of International Trade & Economic Development, Taylor and Francis Journals, vol. 14(4), pages 377-405, December. [Downloadable!] (restricted)
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  3. Rimmer, Maureen T & Powell, Alan A, 1996. "An Implicitly Additive Demand System," Applied Economics, Taylor and Francis Journals, vol. 28(12), pages 1613-22, December. [Downloadable!] (restricted)
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  5. Jeffrey Reimer & Thomas Hertel, 2004. "Estimation of International Demand Behaviour for Use with Input-Output Based Data," Economic Systems Research, Taylor and Francis Journals, vol. 16(4), pages 347-366, January. [Downloadable!] (restricted)
  6. Cranfield, J. A. L. & Preckel, Paul V. & Eales, James S. & Hertel, Thomas W., 2004. "Simultaneous estimation of an implicit directly additive demand system and the distribution of expenditure--an application of maximum entropy," Economic Modelling, Elsevier, vol. 21(2), pages 361-385, March. [Downloadable!] (restricted)
  7. Shaohua Chen & Martin Ravallion, 2004. "Welfare Impacts of China's Accession to the World Trade Organization," World Bank Economic Review, Oxford University Press, vol. 18(1), pages 29-57.
  8. Ravallion, Martin, 1997. "Can high-inequality developing countries escape absolute poverty?," Economics Letters, Elsevier, vol. 56(1), pages 51-57, September. [Downloadable!] (restricted)
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  9. Joseph Francois & Hans van Meijl & Frank van Tongeren, 2005. "Trade liberalization in the Doha Development Round," Economic Policy, CEPR, CES, MSH, vol. 20(42), pages 349-391, 04. [Downloadable!] (restricted)
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  11. Kym Anderson & Will Martin, 2005. "Agricultural Trade Reform and the Doha Development Agenda," The World Economy, Blackwell Publishing, vol. 28(9), pages 1301-1327, 09. [Downloadable!] (restricted)
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  12. L. Alan Winters & Neil McCulloch & Andrew McKay, 2004. "Trade Liberalization and Poverty: The Evidence So Far," Journal of Economic Literature, American Economic Association, vol. 42(1), pages 72-115, March. [Downloadable!] (restricted)
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  14. J. A. L. Cranfield & James S. Eales & Thomas W. Hertel & Paul V. Preckel, 2003. "Model selection when estimating and predicting consumer demands using international, cross section data," Empirical Economics, Springer, vol. 28(2), pages 353-364, 04. [Downloadable!] (restricted)
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  1. Hertel, Thomas W. & Keeney, Roman, 2009. "The Poverty Impacts of Global Commodity Trade Liberalization," Agricultural Distortions Working Paper 52786, World Bank. [Downloadable!]
  2. Keeney, Roman & Beckman, Jayson, 2007. "WTO Impacts on US Rice Producing Households," 2007 Annual Meeting, February 4-7, 2007, Mobile, Alabama 34812, Southern Agricultural Economics Association. [Downloadable!]
  3. Diao, Xinshen & Fan, Shenggen & Headey, Derek & Johnson, Michael & Nin Pratt, Alejandro & Yu, Bingxin, 2008. "Accelerating Africa's food production in response to rising food prices: Impacts and requisite actions," IFPRI discussion papers 825, International Food Policy Research Institute (IFPRI). [Downloadable!]
  4. Ng, Francis & Aksoy, M. Ataman, 2008. "Who are the net food importing countries ?," Policy Research Working Paper Series 4457, The World Bank. [Downloadable!]
  5. Sebastian Hess & Stephan von Cramon-Taubadel, 2007. "Assessing General and Partial Equilibrium Simulations of Doha Round Outcomes using Meta-Analysis," cege – Center for European, Governance and Economic Development Research Discussion Papers 67, cege – Center for European, Governance and Economic Development Research, University of Goettingen (Germany).. [Downloadable!]
  6. Verma, Monika & Hertel, Thomas W., 2009. "Commodity price volatility and nutrition vulnerability:," IFPRI discussion papers 895, International Food Policy Research Institute (IFPRI). [Downloadable!]
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