The relative importance of global agricultural subsidies and market access
AbstractThe claim by global trade modelers that the potential contribution to global economic welfare of removing agricultural subsidies is less than one-tenth of that from removing agricultural tariffs puzzles many observers. To help explain that result, the authors first compare the OECD and model-based estimates of the extent of the producer distortions (leaving aside consumer distortions), and show that 75 percent of total support is provided by market access barriers when account is taken of all forms of support to farmers and to agricultural processors globally, and only 19 percent to domestic farm subsidies. Then the authors provide a back-of-the-envelope (BOTE) calculation of the welfare cost of those distortions. Assuming unitary supply and demand elasticities, that BOTE analysis suggests 86 percent of the welfare cost is due to tariffs and only 6 percent to domestic farm subsidies. When the higher costs associated with the greater variability of trade measures relative to domestic support are accounted for, the BOTE estimate of the latter's share falls to 4 percent. This is close to the 5 percent generated by the most commonly used global model (GTAP) and reported in the paper's final section.
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Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 3900.
Date of creation: 01 Apr 2006
Date of revision:
Economic Theory&Research; Markets and Market Access; Free Trade; Trade Law; Tax Law;
Other versions of this item:
- Anderson, Kym & Martin, Will & Valenzuela, Ernesto, 2006. "The relative importance of global agricultural subsidies and market access," World Trade Review, Cambridge University Press, vol. 5(03), pages 357-376, November.
- Anderson, Kym & Martin, Will & Valenzuela, Ernesto, 2006. "The Relative Importance of Global Agricultural Subsidies and Market Access," CEPR Discussion Papers 5569, C.E.P.R. Discussion Papers.
- Anderson, Kym & Martin, William J. & Valenzuela, Ernesto, 2006. "The Relative Importance of Global Agricultural Subsidies and Market Access," 2006 Annual meeting, July 23-26, Long Beach, CA 21180, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
- C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
- D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
- Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
- Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
This paper has been announced in the following NEP Reports:
- NEP-AGR-2006-04-29 (Agricultural Economics)
- NEP-ALL-2006-04-29 (All new papers)
- NEP-INT-2006-04-29 (International Trade)
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.:
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