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Agricultural Tariffs or Subsidies: Which Are More Important for Developing Economies?


  • Bernard Hoekman
  • Francis Ng
  • Marcelo Olarreaga


This article assesses the impact of the world price--depressing effect of agricultural subsidies and border protection in oecd countries on developing economies' exports, imports, and welfare. Developing economy exporters are likely to benefit from reductions in such subsidies and trade barriers, whereas net importers may lose as world prices rise. A simple partial equilibrium model of global trade in commodities that benefit from domestic support or export subsidies is developed to estimate the relevant elasticities. Simulation results suggest that a 50 percent reduction in border protection will have a much larger positive impact on developing economies' exports and welfare than a 50 percent reduction in agricultural subsidies. Although there is significant heterogeneity across developing economies, the results suggest that efforts in the Doha Round of wto negotiations should be directed at substantially reducing border protection. Copyright 2004, Oxford University Press.

Suggested Citation

  • Bernard Hoekman & Francis Ng & Marcelo Olarreaga, 2004. "Agricultural Tariffs or Subsidies: Which Are More Important for Developing Economies?," World Bank Economic Review, World Bank Group, vol. 18(2), pages 175-204.
  • Handle: RePEc:oup:wbecrv:v:18:y:2004:i:2:p:175-204

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    References listed on IDEAS

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    Cited by:

    1. Hiau LooiKee & Alessandro Nicita & Marcelo Olarreaga, 2009. "Estimating Trade Restrictiveness Indices," Economic Journal, Royal Economic Society, vol. 119(534), pages 172-199, January.
    2. Revoredo-Giha, Cesar & Philippidis, George & Toma, Luiza & Renwick, Alan W., 2010. "An Analysis of the Potential Impact of the Elimination of EU Export Refunds for Developing Countries," Working Papers 109417, Scottish Agricultural College, Land Economy Research Group.
    3. Kym Anderson & Will Martin & Dominique van der Mensbrugghe, 2006. "Doha Merchandise Trade Reform: What Is at Stake for Developing Countries?," World Bank Economic Review, World Bank Group, vol. 20(2), pages 169-195.
    4. Beghin, John & Diop, Ndiame & Matthey, Holger, 2006. "Groundnut trade liberalization: Could the South help the south?," World Development, Elsevier, vol. 34(6), pages 1016-1036, June.
    5. Kym Anderson & Will Martin & Dominique van der Mensbrugghe, 2006. "Would Multilateral Trade Reform Benefit Sub-Saharan Africans?," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 15(4), pages 626-670, December.
    6. Will Martin & Kym Anderson, 2008. "Agricultural trade reform under the Doha Agenda: some key issues ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 52(1), pages 1-16, March.
    7. Gawande, Kishore & Hoekman, Bernard, 2006. "Lobbying and Agricultural Trade Policy in the United States," International Organization, Cambridge University Press, vol. 60(03), pages 527-561, July.
    8. Hndi, B. M. & Maitah, M. & Mustofa, J., 2016. "Trade Impacts of Selected Free Trade Agreements on Agriculture: The Case of Selected North African Countries," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 8(3), September.
    9. Zhaohui Niu & Chang Liu & Saileshsingh Gunessee & Chris Milner, 2017. "Non-Tariff and Overall Protection: Evidence from Across Countries and Over Time," Discussion Papers 2017-08, University of Nottingham, GEP.
    10. Romain Perez & Mustapha Sadni Jallab, 2009. "Preference erosion and market access liberalization: the African dilemma in multilateral negotiations on agriculture," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(2), pages 277-292, July.
    11. Kym Anderson & Will Martin & Dominique van der Mensbrugghe, 2006. "Distortions to World Trade: Impacts on Agricultural Markets and Farm Incomes," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 28(2), pages 168-194.
    12. 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.
    13. Chad E. Hart & John C. Beghin, 2004. "Rethinking Agricultural Domestic Support under the World Trade Organization," Center for Agricultural and Rural Development (CARD) Publications 04-bp43, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    14. Urban, Kirsten & Jensen, Hans G. & Brockmeier, Martina, 2016. "How decoupled is the Single Farm Payment and does it matter for international trade?," Food Policy, Elsevier, vol. 59(C), pages 126-138.
    15. Will Martin & Kym Anderson, 2006. "Agricultural Trade Reform and the Doha Development Agenda," World Bank Publications, The World Bank, number 6889.
    16. Surabhi Mittal, 2007. "OECD Agricultural Trade Reforms Impact On India's Prces and Producer's Welfare," Working Papers id:1072, eSocialSciences.
    17. Guido Porto, 2010. "International Market Access and Poverty in Argentina," Review of International Economics, Wiley Blackwell, vol. 18(2), pages 396-407, May.
    18. Bown, Chad P. & Crowley, Meredith A, 2016. "The Empirical Landscape of Trade Policy," CEPR Discussion Papers 11216, C.E.P.R. Discussion Papers.
    19. Beghin, John C., 2006. "Evolving dairy markets in Asia: Recent findings and implications," Food Policy, Elsevier, vol. 31(3), pages 195-200, June.
    20. Jales, Mario & Josling, Timothy E. & Nassar, Andre Meloni & Tutwiler, M. Ann, 2005. "Market Access," Trade Policy Issues Papers 14570, International Agricultural Trade Research Consortium.
    21. Keith Walsh & Martina Brockmeier & Alan Matthews, 2005. "Implications of Domestic Support Disciplines for Further Agricultural Trade Liberalization," The Institute for International Integration Studies Discussion Paper Series iiisdp99, IIIS.
    22. Surabhi Mittal, 2007. "Oecd Agricultural Trade Reforms Impact On India’s Prices And Producers Welfare," Trade Working Papers 22225, East Asian Bureau of Economic Research.
    23. Author-Name: Jeffrey D. Sachs & John W. McArthur & Guido Schmidt-Traub & Margaret Kruk & Chandrika Bahadur & Michael Faye & Gordon McCord, 2004. "Ending Africa's Poverty Trap," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 35(1), pages 117-240.

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