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How Would Global Trade Liberalization Affect Rural and Regional Incomes in Australia


  • Kym Anderson

    () (School of Economics, University of Adelaide)

  • James Giesecke

    () (Monash University)

  • Ernesto Valenzuela

    () (School of Economics, University of Adelaide)


Agricultural protection in rich countries, which had depressed Australian farm incomes via its impact on Australia's terms of trade, has diminished over the past two decades. So too has agricultural export taxation in poor countries, which had the opposite impact on those terms of trade. Meanwhile, however, import protection for developing country farmers has been steadily growing, and OPEC has been keeping up prices of energy raw materials. To what extent are Australian farmers and rural regions still adversely affected by farm and non-farm price-distortive policies abroad? This paper draws on new evidence on the current extent of those domestic and foreign distortions first to model their net impact on Australia's terms of trade (TOT, using the World Bank's Linkage model of the global economy), and second to model the effects of that TOT impact on rural vs urban and other regions and households within Australia as of 2004 (using Monash's multi-regional TERM model of the Australian economy). The results vindicate the continuing push by Australia's rural communities for multilateral agricultural trade liberalization.

Suggested Citation

  • Kym Anderson & James Giesecke & Ernesto Valenzuela, 2009. "How Would Global Trade Liberalization Affect Rural and Regional Incomes in Australia," School of Economics Working Papers 2009-09, University of Adelaide, School of Economics.
  • Handle: RePEc:adl:wpaper:2009-09

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    References listed on IDEAS

    1. Tyers,Rod & Anderson,Kym, 2011. "Disarray in World Food Markets," Cambridge Books, Cambridge University Press, number 9780521172318, March.
    2. Kym Anderson & Peter Lloyd & Donald Maclaren, 2007. "Distortions to Agricultural Incentives in Australia Since World War II," The Economic Record, The Economic Society of Australia, vol. 83(263), pages 461-482, December.
    3. Mark Horridge & Glyn Wittwer, 2008. "Creating and managing an impossibly large CGE database that is up-to-date," Centre of Policy Studies/IMPACT Centre Working Papers g-175, Victoria University, Centre of Policy Studies/IMPACT Centre.
    4. Kym Anderson & Will Martin, 2009. "Distortions to Agricultural Incentives in Asia," World Bank Publications, The World Bank, number 2611.
    5. Kym Anderson, 2009. "Distortions to Agricultural Incentives : A Global Perspective, 1955-2007," World Bank Publications, The World Bank, number 9436.
    6. Anderson, Kym & Lattimore, Ralph G. & Lloyd, Peter J. & MacLaren, Donald, 2007. "Distortions to Agricultural Incentives in Australia and New Zealand," 2007 Conference (51st), February 13-16, 2007, Queenstown, New Zealand 10407, Australian Agricultural and Resource Economics Society.
    7. Valenzuela, Ernesto & Wong, Sara & Sandri, Damiano, 2007. "Distortions to Agricultural Incentives in Ecuador," Agricultural Distortions Working Paper 48394, World Bank.
    8. Gardner, Bruce L., 2008. "Distortions to Agricultural Incentives in the United States and Canada," Agricultural Distortions Working Paper 48573, World Bank.
    9. van der Mensbrugghe, Dominique & Valenzuela, Ernesto & Anderson, Kym, 2009. "Border Price and Export Demand Shocks for Developing Countries from Rest-of-World Trade Liberalization Using the Linkage Model," Agricultural Distortions Working Paper 52797, World Bank.
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    Cited by:

    1. James Andrew Giesecke, 2011. "Development of a Large-scale Single US Region CGE Model using IMPLAN Data: A Los Angeles County Example with a Productivity Shock Application," Spatial Economic Analysis, Taylor & Francis Journals, vol. 6(3), pages 331-350, April.
    2. Giesecke, James A. & Madden, John R., 2013. "Regional Computable General Equilibrium Modeling," Handbook of Computable General Equilibrium Modeling, Elsevier.
    3. Kym Anderson, 2010. "The Impact of Manufacturing Protection on Agricultural Incentives in Australia," World Scientific Book Chapters,in: Light The Lamp Papers on World Trade and Investment in Memory of Bijit Bora, chapter 4, pages 85-115 World Scientific Publishing Co. Pte. Ltd..
    4. Esmedekh Lkhanaajav, 2016. "CoPS-style CGE modelling and analysis," Centre of Policy Studies/IMPACT Centre Working Papers g-264, Victoria University, Centre of Policy Studies/IMPACT Centre.

    More about this item


    trade liberalisation; rural income; regional CGE modeling;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies


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