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Reducing distortions to agricultural incentives : progress, pitfalls, and prospects

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Author Info
Anderson, Kym

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Abstract

Most of the world's poorest people depend on farming for their livelihood. Earnings from farming in low-income countries are depressed partly due to a pro-urban bias in own-country policies, and partly because richer countries (including some developing countries) favor their farmers with import barriers and subsidies. Both sets of policies reduce national and global economic growth and add to inequality and poverty in developing countries. Acknowledgement of that since the 1980s has given rise to greater pressures for reform, both internal and external. Over the past two decades numerous developing country governments have reduced their sectoral and trade policy distortions, while many high-income countries continue with protectionist policies that harm developing country exports of farm products. Recent research suggests that the agricultural protectionist policies of high-income countries reduce welfare in many developing countries. Most of those studies also suggest that full global liberalization of merchandise trade would raise value added in agriculture in developing country regions, and that much of the benefit from global reform would come not just from reform in high-income countries but also from liberalization among developing countries, including in many cases own-country reform. These findings raise three key questions that are addressed in this paper: To what extent have the reforms of the past two decades succeeded in reducing distortions to agricultural incentives? Do current policy distortions still discriminate against farmers in low-income countries? And what are the prospects for further reform in the next decade or so?

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4092.

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Date of creation: 01 Dec 2006
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Handle: RePEc:wbk:wbrwps:4092

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Keywords: Economic Theory&Research; Agribusiness; Free Trade; Rural Development Knowledge&Information Systems; Achieving Shared Growth;

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This paper has been announced in the following NEP Reports: References listed on IDEAS
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. Kee, Hiau Looi & Nicita, Alessandro & Olarreaga, Marcelo, 2006. "Estimating trade restrictiveness indices," Policy Research Working Paper Series 3840, The World Bank. [Downloadable!]
    Other versions:
  2. Hayami, Yujiro, 2007. "An emerging agricultural problem in high-performing Asian economies," Policy Research Working Paper Series 4312, The World Bank. [Downloadable!]
  3. Kym Anderson & Lee Ann Jackson, 2005. "Some Implications of GM Food Technology Policies for Sub-Saharan Africa," Journal of African Economies, Oxford University Press, vol. 14(3), pages 385-410, September.
  4. Isgut, Alberto & Fernandes, Ana, 2007. "Learning-by-Exporting Effects: Are They for Real?," MPRA Paper 3121, University Library of Munich, Germany. [Downloadable!]
  5. Simon J. Evenett, 2007. "The Trade Policy Jungle: A Survival Guide for Academic Economists," University of St. Gallen Department of Economics working paper series 2007 2007-16, Department of Economics, University of St. Gallen. [Downloadable!]
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  6. Walter P. Falcon & Rosamond L. Naylor, 2005. "Rethinking Food Security for the Twenty-First Century," American Journal of Agricultural Economics, American Agricultural Economics Association, vol. 87(5), pages 1113-1127, November. [Downloadable!] (restricted)
  7. Valdes, A, 1996. "Surveillance of Agricultural Price and Trade Policy in Latin America during Major Policy Reform," World Bank - Discussion Papers 349, World Bank.
  8. Anderson, Kym, 1995. "Lobbying Incentives and the Pattern of Protection in Rich and Poor Countries," Economic Development and Cultural Change, University of Chicago Press, vol. 43(2), pages 401-23, January.
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  9. Melitz, Marc J, 2002. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," CEPR Discussion Papers 3381, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  10. Blalock, Garrick & Gertler, Paul J., 2004. "Learning from exporting revisited in a less developed setting," Journal of Development Economics, Elsevier, vol. 75(2), pages 397-416, December. [Downloadable!] (restricted)
  11. Choi, E Kwan & Harrigan, James, 2004. "Handbook of International Trade," Staff General Research Papers 11375, Iowa State University, Department of Economics.
  12. Rodrik, Dani, 1995. "Political economy of trade policy," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 28, pages 1457-1494 Elsevier. [Downloadable!] (restricted)
  13. Jensen, Henning Tarp & Robinson, Sherman & Tarp, Finn, 2002. "General equilibrium measures of agricultural policy bias in fifteen developing countries," TMD discussion papers 105, International Food Policy Research Institute (IFPRI). [Downloadable!]
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  14. Hayami, Yujiro, 2005. "An Emerging Agricultural Problem in High-Performing Asian Economies," Miscellaneous Papers 11826, Agecon Search. [Downloadable!]
  15. kishore gawande & pravin krishna, 2005. "The Political Economy of Trade Policy: Empirical Approaches," International Trade 0503003, EconWPA. [Downloadable!]
  16. Krueger, Anne O & Schiff, Maurice & Valdes, Alberto, 1988. "Agricultural Incentives in Developing Countries: Measuring the Effect of Sectoral and Economywide Policies," World Bank Economic Review, Oxford University Press, vol. 2(3), pages 255-71, September.
  17. Anderson, Kym & Martin, Will & van der Mensbrugghe, Dominique, 2005. "Distortions to world trade: impacts on agricultural markets and farm incomes," Policy Research Working Paper Series 3736, The World Bank. [Downloadable!]
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  18. Valdes, A., 2000. "Agricultural Support Policies in Transition Economies," Papers 470, World Bank - Technical Papers.
  19. Anderson, Kym, 2005. "Setting the trade policy agenda : What roles for Economists?," Policy Research Working Paper Series 3560, The World Bank. [Downloadable!]
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  20. Rainer Thiele, 2002. "The Bias Against Agriculture in Sub-Saharan Africa: Has It Survived 20 Years of Structural Adjustment Programs?," Kiel Working Papers 1102, Kiel Institute for the World Economy. [Downloadable!]
  21. Sourafel Girma & David Greenaway & Richard Kneller, 2004. "Does Exporting Increase Productivity? A Microeconometric Analysis of Matched Firms," Review of International Economics, Blackwell Publishing, vol. 12(5), pages 855-866, November. [Downloadable!] (restricted)
  22. Lopez, Ramon & Galinato, Gregmar I., 2007. "Should governments stop subsidies to private goods? Evidence from rural Latin America," Journal of Public Economics, Elsevier, vol. 91(5-6), pages 1071-1094, June. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, 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. Benjamin N. Dennis & Talan Iscan, 2007. "Agricultural Distortions, Structural Change, and Economic Growth: A Cross-Country Analysis," Department of Economics at Dalhousie University working papers archive distort35, Dalhousie, Department of Economics. [Downloadable!]
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