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The Poverty Impacts of Global Commodity Trade Liberalization

  • Hertel, Thomas W.
  • Keeney, Roman

This paper examines the poverty impacts of global merchandise trade reform by looking at a wide range of developing countries in Africa, Asia and Latin America. Overall, we find that trade reform tends to reduce poverty primarily through the inclusion of agricultural components. The majority of our developing country sample experiences small poverty increases from non-agricultural reforms. We explore the relative poverty-friendliness of agricultural trade reforms in detail, examining the differential impacts on real after-tax factor returns of agricultural versus non-agricultural reforms. This analysis is extended to the distribution of households by looking at stratum-specific poverty changes. Our findings indicate that the more favorable impacts of agricultural reforms are driven by increased returns to peasant farm households’ labor as well as higher returns for unskilled wage labor. Finally, we examine the commodity-specific poverty impacts of trade reform for this sample of countries. We find that liberalization of food grains and other processed foods represent the largest contributions to poverty reduction. More specifically, it is tariff reform in these commodity markets that dominates the poverty increasing impacts of wealthy country subsidy removal.

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File URL: http://purl.umn.edu/52786
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Paper provided by World Bank in its series Agricultural Distortions Working Paper with number 52786.

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Date of creation: Jun 2009
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Handle: RePEc:ags:wbadwp:52786
Contact details of provider: Web page: http://www.worldbank.org

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  1. Anderson, Kym & Martin, William J., 2007. "Distortions to Agricultural Incentives in Asia," Agricultural Distortions Working Paper 48557, World Bank.
  2. Hertel, Thomas & Keeney, Roman & Ivanic, Maros & Winters, Alan, 2006. "Distributional Effects of WTO Agricultural Reforms in Rich and Poor Countries," GTAP Working Papers 2185, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
  3. W. Jill Harrison & J. Mark Horridge & K.R. Pearson, 2000. "Decomposing Simulation Results with Respect to Exogenous Shocks," Computational Economics, Society for Computational Economics, vol. 15(3), pages 227-249, June.
  4. Hertel, Thomas & Keeney, Roman & Ivanic, Maros & Winters, Alan, 2007. "Why Isn’t the Doha Development Agenda More Poverty Friendly?," GTAP Working Papers 2292, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
  5. de Janvry, Alain & Fafchamps, Marcel & Sadoulet, Elisabeth, 1991. "Peasant Household Behaviour with Missing Markets: Some Paradoxes Explained," Economic Journal, Royal Economic Society, vol. 101(409), pages 1400-417, November.
  6. Harrison, W Jill & Pearson, K R, 1996. "Computing Solutions for Large General Equilibrium Models Using GEMPACK," Computational Economics, Society for Computational Economics, vol. 9(2), pages 83-127, May.
  7. Cranfield, J. A. L. & Preckel, Paul V. & Eales, James S. & Hertel, Thomas W., 2002. "Estimating consumer demands across the development spectrum: maximum likelihood estimates of an implicit direct additivity model," Journal of Development Economics, Elsevier, vol. 68(2), pages 289-307, August.
  8. Keeney, Roman & Thomas Hertel, 2005. "GTAP-AGR : A Framework for Assessing the Implications of Multilateral Changes in Agricultural Policies," GTAP Technical Papers 1869, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
  9. Valenzuela, Ernesto & Kym Anderson, 2009. "Alternative Agricultural Price Distortions for CGE Analysis of Developing Countries, 2004 and 1980-84," GTAP Research Memoranda 2925, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
  10. Thomas W. Hertel & Maros Ivanic & Paul V. Preckel & John A. L. Cranfield, 2004. "The Earnings Effects of Multilateral Trade Liberalization: Implications for Poverty," World Bank Economic Review, World Bank Group, vol. 18(2), pages 205-236.
  11. Joseph Francois & Hans Van Meijl & Frank Van Tongeren, 2005. "Trade liberalization in the Doha Development Round," Economic Policy, CEPR;CES;MSH, vol. 20(42), pages 349-391, 04.
  12. Valenzuela, Ernesto & Wong, Sara & Sandri, Damiano, 2007. "Distortions to Agricultural Incentives in Ecuador," Agricultural Distortions Working Paper 48394, World Bank.
  13. repec:cup:cbooks:9780521029018 is not listed on IDEAS
  14. Hertel, Thomas, . "Global Trade Analysis: Modeling and applications," GTAP Books 7685, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
  15. Anderson, Kym & Martin, Will & van der Mensbrugghe, Dominique, 2005. "Global impacts of Doha trade reform scenarios on poverty," Policy Research Working Paper Series 3735, The World Bank.
  16. Golub, Alla & W. Hertel, Thomas, 2008. "Global Economic Integration and Land Use Change," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 23, pages 463-488.
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