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Reforms in Indian agro-processing and agriculture sectors in the context of unilateral and multilateral trade agreements

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Author Info

  • A. Ganesh-Kumar

    ()
    (Indira Gandhi Institute of Development Research)

  • Manoj K. Panda

    ()
    (Indira Gandhi Institute of Development Research)

  • Mary E. Burfisher

    (Economic Research Services, United States Department of Agriculture)

Registered author(s):

    Abstract

    In this paper, we explore the potential impacts of trade and investment-related policy reforms on India's agro-processing sector. We consider the direct effects of policy reforms within the processing sector, and the indirect effects on agro-processing of policy reforms in the primary agriculture sector, in the Indian economy as a whole, and in a multilateral framework. Towards this, we develop a 22-sector, 16-region version of the GTAP computable general equilibrium (CGE), global model for our analysis. We find that trade and investment-related reforms in agro-processing together can help the sector to grow. Policy reforms that stimulate investment and help to improve productivity will be crucial in offsetting the contractionary pressures of trade reform alone on the production of processed agricultural products. We also find that indirect effects on agroprocessing from India's policy reforms in other sectors are more important than reforms in agro-processing itself. Our findings argue for an economy-wide perspective when targeting reform or development of the agro-processing sector in India. Compared to trade reform, comprehensive domestic reforms in the agro-processing and agriculture sectors relating to investment are critical for achieving growth in agro-processing. However, while the impacts of trade reform per se seem to be small, trade reform - by ushering in a higher degree of competition - could itself be a stimulus for investment and productivity gains in India. At present, unilateral reforms, especially those that improve productivity in agroprocessing and in primary agriculture, are more important to agro-processing than multilateral trade reforms. Nevertheless, our findings also suggest the importance of pursuing a domestic reform agenda within a multilateral trading strategy that can accommodate the expected economic growth of India and its future role in global markets, with general equilibrium effects on agro-processing.

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    Bibliographic Info

    Paper provided by Indira Gandhi Institute of Development Research, Mumbai, India in its series Indira Gandhi Institute of Development Research, Mumbai Working Papers with number 2006-011.

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    Length: 32 pages
    Date of creation: Dec 2006
    Date of revision:
    Handle: RePEc:ind:igiwpp:2006-011

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    Related research

    Keywords: Agriculture; Agro-processing; Trade agreements; CGE models;

    References

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    1. Martin, Will & Mitra, Devashish, 1999. "Productivity growth and convergence in agriculture and manufacturing," Policy Research Working Paper Series 2171, The World Bank.
    2. Hewings, Geoffrey J. D. & Fonseca, Manuel & Guilhoto, Joaquim & Sonis, Michael, 1989. "Key sectors and structural change in the Brazilian economy: A comparison of alternative approaches and their policy implications," Journal of Policy Modeling, Elsevier, vol. 11(1), pages 67-90.
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    Cited by:
    1. Shutes, Lindsay & Ganesh-Kumar, Anand & Meijerink, Gerdien W., 2012. "Fluctuating staple prices and household poverty in India," MPRA Paper 40982, University Library of Munich, Germany.
    2. A. Ganesh Kumar & Ashok Gulati & Ralph Cummings, Jr., 2009. "Reforming Foodgrains Management: Achieving Food Security with Cost-Effectiveness," Working Papers id:2172, eSocialSciences.

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