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The Uruguay Round and Welfare in Some Distorted Agricultural Economies


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  • James E. Anderson


There is widespread concern that the Uruguay Round may reduce the welfare of developing countries through its effect on world agricultural prices. Reduced agricultural price distortions among major supplying nations are predicted to increase basic food prices and decrease some important export prices such as those for coffee and cotton. It appears that raising food prices paid by food importers must be bad for them, while reducing world coffee and cotton prices appears bad for exporters of those products. Appearances may be deceiving, however, since theory shows that a distortion effect operates alongside the standard terms of trade effect. I report here distortion effects which are many times larger" than terms of trade effects in an analysis of the Uruguay Round's impact on 9 agricultural economies. I deploy a simple Computable General Equilibrium model. The 9 developing economies are distorted by domestic agricultural distortions in 15 markets, along with hundreds of 4 digit nonagricultural tariffs and quotas. In 3 of 9 countries, the distortion effect reverses the impact of the terms of trade effect. In 2 other countries the distortion effect raises a trivial terms of trade effect up to around 1% of national income.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5923.

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Date of creation: Feb 1997
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Publication status: published as Journal of Development Economics, Vol. 56 (1998): 393-410.
Handle: RePEc:nbr:nberwo:5923

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  1. J Anderson & J.P. Neary, 1993. "Domestic Distortions and International Trade," CEP Discussion Papers, Centre for Economic Performance, LSE dp0179, Centre for Economic Performance, LSE.
  2. James Anderson, 1995. "Trade Restrictiveness Benchmarks," Boston College Working Papers in Economics, Boston College Department of Economics 290., Boston College Department of Economics.
  3. Lopez, Ramon & Panagariya, Arvind, 1992. "On the Theory of Piecemeal Tariff Reform: The Case of Pure Imported Intermediate Inputs," American Economic Review, American Economic Association, American Economic Association, vol. 82(3), pages 615-25, June.
  4. J Anderson & J.P. Neary, 1993. "A New Approach to Evaluating Trade Policy," CEP Discussion Papers, Centre for Economic Performance, LSE dp0173, Centre for Economic Performance, LSE.
  5. Alston, Julian M & Martin, Will, 1995. "Border Price Changes and Domestic Welfare in the Presence of Distortions: A Comment," Oxford Economic Papers, Oxford University Press, vol. 47(1), pages 79-82, January.
  6. Anderson, James E & Neary, J Peter, 1994. "Measuring the Restrictiveness of Trade Policy," World Bank Economic Review, World Bank Group, World Bank Group, vol. 8(2), pages 151-69, May.
  7. K. Anderson & R. Tyers, 1993. "More On Welfare Gains To Developing Countries From Liberalizing World Food Trade," Journal of Agricultural Economics, Wiley Blackwell, Wiley Blackwell, vol. 44(2), pages 189-204.
  8. Tyers, Rod & Falvey, Rod, 1989. "Border Price Changes and Domestic Welfare in the Presence of Subsidised Exports," Oxford Economic Papers, Oxford University Press, vol. 41(2), pages 434-51, April.
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Cited by:
  1. Silke Friedrich, 2011. "Policy Persistence and Rent Extraction," Ifo Working Paper Series Ifo Working Paper No. 110, Ifo Institute for Economic Research at the University of Munich.
  2. Stephen Tokarick, 2003. "Measuring the Impact of Distortions in Agricultural Trade in Partial and General Equilibrium," IMF Working Papers 03/110, International Monetary Fund.
  3. van der Merwe, A. & Otto, Rolf-Joachim, 1997. "International marketing developments and the effects on South African agriculture," Agrekon, Agricultural Economics Association of South Africa (AEASA), Agricultural Economics Association of South Africa (AEASA), vol. 36(4), December.
  4. Luis San Vicente Portes, 2005. "On the Distributional Effects of Trade Policy: A Macroeconomic Perspective," Computing in Economics and Finance 2005, Society for Computational Economics 358, Society for Computational Economics.
  5. Silke Friedrich, 2013. "Policy persistence and rent extraction," Public Choice, Springer, Springer, vol. 157(1), pages 287-304, October.
  6. Burfisher, Mary E. & Robinson, Sherman & Thierfelder, Karen, 2000. "Small countries and the case for regionalism vs. multilateralism," TMD discussion papers, International Food Policy Research Institute (IFPRI) 54, International Food Policy Research Institute (IFPRI).


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