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Global Agricultural Liberalization: An In-Depth Assessment of What Is At Stake

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  • Dominique van der Mensbrugghe
  • John C. Beghin

Abstract

We use the global LINKAGE model to assess the impact of trade and support policies in agriculture on income, trade, and output patterns. We provide order-of-magnitude estimates of the impacts of policy changes rather than point estimates. Two sets of simulations are used to identify key drivers in the results. One set decomposes the aggregate results by looking at the impacts of partial reforms, regionally and across instruments, to identify the relative contribution to global gains of reforms in industrialized and developing countries and of border protection versus domestic support. The second set responds to critics of trade reform (inflated gains for developing countries, no transition costs for industrial country farmers, uncertain supply response in developing countries). Reform of agriculture and food provides 70 percent of the global gains from merchandise trade reform of $385 billion. The global gains are shared equally among industrial and developing countries. Developing countries gain more as a share of initial income, and income gains occur in developing country agriculture, reducing poverty. Both groups of countries gain more from their own reforms than from the other group's reforms. Productivity and supply assumptions affect impact assessment, but their influence is small and does not alter the main aggregate findings. Trade elasticities, however, are key in determining the overall level of the income gains. Higher elasticities dampen terms-of-trade effects and increase trade and real income gains more than proportionally and the converse is true for smaller elasticities. These effects can be very large for individual countries.

Suggested Citation

  • Dominique van der Mensbrugghe & John C. Beghin, 2004. "Global Agricultural Liberalization: An In-Depth Assessment of What Is At Stake," Food and Agricultural Policy Research Institute (FAPRI) Publications (archive only) 04-wp370, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  • Handle: RePEc:ias:fpaper:04-wp370
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    References listed on IDEAS

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    1. World Bank, 2001. "Global Economic Prospects and the Developing Countries 2001," World Bank Publications - Books, The World Bank Group, number 14779.
    2. World Bank, 2002. "Global Economic Prospects and the Developing Countries 2002," World Bank Publications - Books, The World Bank Group, number 14050.
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    Cited by:

    1. Jacinto F. Fabiosa, 2008. "What Effect Does Free Trade in Agriculture Have on Developing Country Populations Around the World?," Food and Agricultural Policy Research Institute (FAPRI) Publications (archive only) 08-wp466, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    2. Bouët, Antoine & Laborde Debucquet, David, 2017. "Why is the Doha Development agenda failing? And what can be done? A computable general equilibrium-game theoretical approach :," IFPRI book chapters, in: Bouët, Antoine & Laborde Debucquet, David (ed.), Agriculture, development, and the global trading system: 2000– 2015, chapter 3, International Food Policy Research Institute (IFPRI).
    3. Jacinto F. Fabiosa, 2008. "What Effect Does Free Trade in Agriculture Have on Developing Country Populations Around the World?," Center for Agricultural and Rural Development (CARD) Publications 08-wp466, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    4. Lee, Hiro & van der Mensbrugghe, Dominique, 2005. "Free Trade Agreements and Sectoral Adjustments in East Asia," Conference papers 331434, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

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