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Challenges for Less Developed Countries: Agricultural Policies in the EU and the US

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  • Paul Schure
  • G. Cornelis van Kooten
  • Yichuan Wang

Abstract

Agricultural policies adopted by developed countries are considered distortional and detrimental to less developed countries (LDCs). This paper discusses the adverse impacts on less developed countries of the agricultural support regimes of the European Union (EU) and the United States (US). Despite the fact that the budget for agriculture in these constituencies has the same order of magnitude, we find that the EU relies much more heavily on agricultural support than does the US. Specifically, the EU provides agricultural producers with an amount of support that is about two-and-a-half times that of the US, and for most commodities a larger share of farmers’ income stems from support measures as well. While the composition of producer support differs between the EU and US, the per-dollar negative impact of the policies on farmers in LDCs is about equal. Finally, we analyse the medium-term impact of the 2003 reform of common agricultural policy in the EU. We estimate the reform will lead to a reduction of EU producer support of 20 percent by 2013 and will reduce the per-dollar negative impact on LDCs of the policy as well.

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File URL: https://web.uvic.ca/~repa/publications/REPA%20working%20papers/WorkingPaper2007-08.pdf
File Function: Final version, 2007
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Bibliographic Info

Paper provided by University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group in its series Working Papers with number 2007-08.

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Length: 49 pages
Date of creation: Dec 2007
Date of revision:
Handle: RePEc:rep:wpaper:2007-08

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Keywords: agricultural support; European Union; US; developing countries; least-developed countries;

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  1. Anderson, Kym, 2004. "Agricultural trade reform and poverty reduction in developing countries," Policy Research Working Paper Series 3396, The World Bank.
  2. Brandao, Antonio Salazar P. & Martin, Will J., 1993. "Implications of agricultural trade liberalization for the developing countries," Agricultural Economics, Blackwell, vol. 8(4), pages 313-343, June.
  3. Dercon, Stefan, 1993. "Peasant Supply Response and Macroeconomic Policies: Cotton in Tanzania," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 2(2), pages 157-94, October.
  4. Brandao, Antonio Salazar P. & Martin, Will J., 1993. "Implications of agricultural trade liberalization for the developing countries," Agricultural Economics: The Journal of the International Association of Agricultural Economists, International Association of Agricultural Economists, vol. 8(4), June.
  5. M. Ataman Aksoy & John C. Beghin, 2005. "Global Agricultural Trade and Developing Countries," World Bank Publications, The World Bank, number 7464, February.
  6. Beghin, John C. & Roland-Holst, David & Van der Mensbrugghe, Dominique, 2002. "How Will Agricultural Trade Reforms in High-Income Countries Affect the Trading Relationships of Developing Countries?," Staff General Research Papers 10665, Iowa State University, Department of Economics.
  7. Kym Anderson, 2003. "How Can Agricultural Trade Reform Reduce Poverty?," Centre for International Economic Studies Working Papers 2003-21, University of Adelaide, Centre for International Economic Studies.
  8. John C. Beghin & Ataman Aksoy, 2003. "Agricultural Trade and the Doha Round: Lessons from Commodity Studies," Center for Agricultural and Rural Development (CARD) Publications 03-bp42, Center for Agricultural and Rural Development (CARD) at Iowa State University.
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