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The Uruguay Round and Welfare in Some Distorted Agricultural Economies


  • James E. Anderson


There is widespread concern that the Uruguay Round may reduce the welfare of developing countries through its effect on world agricultural prices. Reduced agricultural price distortions among major supplying nations are predicted to increase basic food prices and decrease some important export prices such as those for coffee and cotton. It appears that raising food prices paid by food importers must be bad for them, while reducing world coffee and cotton prices appears bad for exporters of those products. Appearances may be deceiving, however, since theory shows that a distortion effect operates alongside the standard terms of trade effect. I report here distortion effects which are many times larger" than terms of trade effects in an analysis of the Uruguay Round's impact on 9 agricultural economies. I deploy a simple Computable General Equilibrium model. The 9 developing economies are distorted by domestic agricultural distortions in 15 markets, along with hundreds of 4 digit nonagricultural tariffs and quotas. In 3 of 9 countries, the distortion effect reverses the impact of the terms of trade effect. In 2 other countries the distortion effect raises a trivial terms of trade effect up to around 1% of national income.

Suggested Citation

  • James E. Anderson, 1997. "The Uruguay Round and Welfare in Some Distorted Agricultural Economies," NBER Working Papers 5923, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:5923
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    References listed on IDEAS

    1. James E. Anderson & J. Peter Neary, 1996. "A New Approach to Evaluating Trade Policy," Review of Economic Studies, Oxford University Press, vol. 63(1), pages 107-125.
    2. Anderson, James E & Neary, J Peter, 1994. "Measuring the Restrictiveness of Trade Policy," World Bank Economic Review, World Bank Group, vol. 8(2), pages 151-169, May.
    3. Anderson, James E, 1998. "Trade Restrictiveness Benchmarks," Economic Journal, Royal Economic Society, vol. 108(449), pages 1111-1125, July.
    4. Anderson, James E & Bannister, Geoffrey J & Neary, J Peter, 1995. "Domestic Distortions and International Trade," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 36(1), pages 139-157, February.
    5. K. Anderson & R. Tyers, 1993. "More On Welfare Gains To Developing Countries From Liberalizing World Food Trade," Journal of Agricultural Economics, Wiley Blackwell, vol. 44(2), pages 189-204.
    6. Alston, Julian M & Martin, Will, 1995. "Border Price Changes and Domestic Welfare in the Presence of Distortions: A Comment," Oxford Economic Papers, Oxford University Press, vol. 47(1), pages 79-82, January.
    7. Lopez, Ramon & Panagariya, Arvind, 1992. "On the Theory of Piecemeal Tariff Reform: The Case of Pure Imported Intermediate Inputs," American Economic Review, American Economic Association, vol. 82(3), pages 615-625, June.
    8. Tyers, Rod & Falvey, Rod, 1989. "Border Price Changes and Domestic Welfare in the Presence of Subsidised Exports," Oxford Economic Papers, Oxford University Press, vol. 41(2), pages 434-451, April.
    9. J. P. Neary (ed.), 1995. "International Trade," Books, Edward Elgar Publishing, volume 0, number 575.
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    Cited by:

    1. Silke Friedrich, 2013. "Policy persistence and rent extraction," Public Choice, Springer, vol. 157(1), pages 287-304, October.
    2. Stephen Tokarick, 2003. "Measuring the Impact of Distortions in Agricultural Trade in Partial and General Equilibrium," IMF Working Papers 03/110, International Monetary Fund.
    3. Luis San Vicente Portes, 2005. "On the Distributional Effects of Trade Policy: A Macroeconomic Perspective," Computing in Economics and Finance 2005 358, Society for Computational Economics.
    4. Silke Friedrich, 2011. "Policy Persistence and Rent Extraction," ifo Working Paper Series 110, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    5. van der Merwe, A. & Otto, Rolf-Joachim, 1997. "International marketing developments and the effects on South African agriculture," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 36(4), December.
    6. Burfisher, Mary E. & Robinson, Sherman & Thierfelder, Karen, 2000. "Small countries and the case for regionalism vs. multilateralism," TMD discussion papers 54, International Food Policy Research Institute (IFPRI).

    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade


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