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Structural Change and Agricultural Protection: Costs of Korean Agricultural Policy, 1975 and 1990

Author

Listed:
  • Diao, Xinshen
  • Dyck, John H.
  • Skully, David W.
  • Somwaru, Agapi
  • Lee, Chinkook

Abstract

The economic development of South Korea is often considered a model for developing countries. We use 1975 and 1990 data in a general equilibrium framework with a highly disaggregated sector specification to evaluate the opportunity cost of its agricultural protection. We show that although agriculture's share of the gross domestic product (GDP) declined between 1975 and 1990, the cost of agricultural protection, as measured by the loss in GDP, did not fall. The larger gap between domestic and world prices for the protected sectors exacerbated the distortions in resource allocation. Simulated removal of 1990 agricultural border protection reduced the share of agricultural GDP to the level actually observed in 1996, demonstrating how protection can impede economic structural development. The public policy implication is for developing countries to adopt policies that help the agricultural sector become competitive. Otherwise, as in Korea, the resource costs of delaying adjustment grow over time.

Suggested Citation

  • Diao, Xinshen & Dyck, John H. & Skully, David W. & Somwaru, Agapi & Lee, Chinkook, 2002. "Structural Change and Agricultural Protection: Costs of Korean Agricultural Policy, 1975 and 1990," Agricultural Economics Reports 33921, United States Department of Agriculture, Economic Research Service.
  • Handle: RePEc:ags:uerser:33921
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    File URL: http://purl.umn.edu/33921
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    References listed on IDEAS

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    1. Wales, T. J. & Woodland, A. D., 1983. "Estimation of consumer demand systems with binding non-negativity constraints," Journal of Econometrics, Elsevier, vol. 21(3), pages 263-285, April.
    2. J. Scott Shonkwiler & Steven T. Yen, 1999. "Two-Step Estimation of a Censored System of Equations," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(4), pages 972-982.
    3. Variyam, Jayachandran N. & Blaylock, James R. & Smallwood, David M. & Basiotis, P. Peter, 1998. "USDA's Healthy Eating Index and Nutrition Information," Technical Bulletins 33588, United States Department of Agriculture, Economic Research Service.
    4. Lin, Biing-Hwan & Frazao, Elizabeth & Guthrie, Joanne F., 1999. "Away-From-Home Foods Increasingly Important to Quality of American Diet," Agricultural Information Bulletins 33733, United States Department of Agriculture, Economic Research Service.
    5. Federico Perali & Jean-Paul Chavas, 2000. "Estimation of Censored Demand Equations from Large Cross-Section Data," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(4), pages 1022-1037.
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    Cited by:

    1. Demirdöğen, Alper, 2011. "Tarımsal Korumacılık, Korumacılığın Ölçümü ve Türkiye
      [Agricultural Protectionism, Its Measurement and Turkey]
      ," MPRA Paper 35083, University Library of Munich, Germany.
    2. Jones, Keithly G. & Blayney, Donald P., 2012. "Implications of the South Korea-U.S. Free Trade Agreement on South Korean Dairy Product Imports," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124823, Agricultural and Applied Economics Association.
    3. repec:eee:deveco:v:130:y:2018:i:c:p:45-65 is not listed on IDEAS

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