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Measuring Agricultural Policy Bias: General Equilibrium Analysis of Fifteen Developing Countries

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  • Henning Tarp Jensen
  • Sherman Robinson
  • Finn Tarp

Abstract

Measurement is a key issue in the literature on price incentive bias induced by trade policy. We introduce a general equilibrium measure of the relative effective rate of protection, which generalizes earlier protection measures. For our fifteen sample countries, results indicate that the agricultural price incentive bias generally perceived to exist during the 1980s was largely eliminated during the 1990s. Results also demonstrate that general equilibrium effects and country-specific characteristics are crucial for determining the sign and magnitude of agricultural bias. Our comprehensive protection measure is therefore uniquely suited to capture the full impact of trade policies on relative agricultural price incentives. Copyright 2010, Oxford University Press.

Suggested Citation

  • Henning Tarp Jensen & Sherman Robinson & Finn Tarp, 2010. "Measuring Agricultural Policy Bias: General Equilibrium Analysis of Fifteen Developing Countries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(4), pages 1136-1148.
  • Handle: RePEc:oup:ajagec:v:92:y:2010:i:4:p:1136-1148
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    File URL: http://hdl.handle.net/10.1093/ajae/aaq043
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    References listed on IDEAS

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    1. Agenor, Pierre-Richard & Nabli, Mustapha K. & Yousef, Tarik & Jensen, Henning Tarp, 2007. "Labor market reforms, growth, and unemployment in labor-exporting countries in the Middle East and North Africa," Journal of Policy Modeling, Elsevier, vol. 29(2), pages 277-309.
    2. 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).
    3. Henning Tarp Jensen & Finn Tarp, 2002. "CGE Modelling and Trade Policy: Reassessing The Agricultural Bias," Journal of Agricultural Economics, Wiley Blackwell, vol. 53(2), pages 383-405.
    4. C. Arndt & H.T. Jensen & S. Robinson & F. Tarp, 2000. "Marketing Margins and Agricultural Technology in Mozambique," Journal of Development Studies, Taylor & Francis Journals, vol. 37(1), pages 121-137, October.
    5. Kym Anderson, 2006. "Reducing Distortions to Agricultural Incentives: Progress, Pitfalls, and Prospects," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(5), pages 1135-1146.
    6. Krueger, Anne O, 1998. "Why Trade Liberalisation Is Good for Growth," Economic Journal, Royal Economic Society, vol. 108(450), pages 1513-1522, September.
    7. 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, World Bank Group, vol. 2(3), pages 255-271, September.
    8. Devarajan, Shantayanan & Sussangkarn, Chalongphob, 1992. "Effective Rates of Protection When Domestic and Foreign Goods Are Imperfect Substitutes: The Case of Thailand," The Review of Economics and Statistics, MIT Press, vol. 74(4), pages 701-711, November.
    9. Bautista, Romeo M. & Robinson, Sherman & Tarp, Finn & Wobst, Peter, 1998. "Policy bias and agriculture: partial and general equilibrium measures," TMD discussion papers 25, International Food Policy Research Institute (IFPRI).
    10. David Abler & Adrián Rodríguez & James Shortle, 1999. "Parameter Uncertainty in CGE Modeling of the Environmental Impacts of Economic Policies," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 14(1), pages 75-94, July.
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    Cited by:

    1. Kym Anderson, 2013. "Agricultural price distortions: trends and volatility, past, and prospective," Agricultural Economics, International Association of Agricultural Economists, vol. 44(s1), pages 163-171, November.
    2. Tony Addison, 2015. "Thirty years in Africa.s development: From structural adjustment to structural transformation?," WIDER Working Paper Series 119, World Institute for Development Economic Research (UNU-WIDER).
    3. Cardoso, Debora Freire & Teixeira, Erly Cardoso & Gurgel, Angelo Costa & Castro, Eduardo Rodrigues de, 2011. "Effects of the rural credit subsidy on economic growth and welfare of Brazilian regions," Working Papers in Applied Economics 114464, Universidade Federal de Vicosa, Departamento de Economia Rural.
    4. Emiko Fukase & Will Martin, 2016. "Agro-processing and horticultural exports from Africa," WIDER Working Paper Series 174, World Institute for Development Economic Research (UNU-WIDER).
    5. Douillet, Mathilde, 2012. "Trade policy reforms in the new agricultural context: Is regional integration a priority for Sub-Saharan African countries agricultural-led industrialization? Insights from a global computable general," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126546, International Association of Agricultural Economists.
    6. Devarajan, Shantayanan & Robinson, Sherman, 2013. "Contribution of Computable General Equilibrium Modeling to Policy Formulation in Developing Countries," Handbook of Computable General Equilibrium Modeling, Elsevier.

    More about this item

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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