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Mexican Agriculture in the Free Trade Agreement: Transition Problems in Economic Reform

Listed author(s):
  • Santiago Levy
  • Sweder van Wijnbergen

Should Mexican agriculture be liberalized? If so, how fast should this be done, and what policies should accompany the transition? We use Mexican agriculture as a case study to analyze the transition problems that arise in most major economic reforms. We focus on the implications for policy design of the absence of efficient capital markets; on the welfare costs of reforming only gradually; on incentive problems created by trade adjustment policies; and on the redistributive aspects of policy reform in the presence of realistic limits on available policy instruments. Our key point is that adjustment should focus on increasing the value of the assets owned by the groups affected, and not on direct income transfers or programs targeted on output or other characteristics controlled by the beneficiaries. We target adjustment on what people have, as opposed to what people do ... L'agriculture mexicaine doit-elle être libéralisée ? Dans l'affirmative, à quel rythme la libéralisation doit-elle être menée et quelles sont les mesures qui doivent être prises pendant la période de transition ? L'exemple de l'agriculture mexicaine est utilisé comme étude de cas pour l'analyse des problèmes provoqués par toute période de transition lors de la plupart des réformes économiques d'importance. L'analyse porte sur les conséquences, pour la mise en place des politiques, de l'absence de marchés de capitaux efficaces ; sur les coûts, pour le bien-être social, d'une réforme graduelle ; sur les problèmes d'incitation créés par les politiques d'ajustement des échanges ; enfin, sur les aspects redistributifs de la réforme de la politique là où il y a des limites sur les instruments de politique existants. L'argument central est que l'ajustement doit s'attacher à l'augmentation de la valeur des avoirs détenus par les groupes concernés et non aux transferts directs des revenus ou ...

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Paper provided by OECD Publishing in its series OECD Development Centre Working Papers with number 63.

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Date of creation: 01 May 1992
Handle: RePEc:oec:devaaa:63-en
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