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Has agricultural trade liberalization improved welfare in the least-developed countries? Yes

Author

Listed:
  • Ingco, Merlinda D.

Abstract

The author evaluates the progress in agricultural liberalization -and the welfare effects for least-developed and net food-importing countries- as a result of agricultural price shocks resulting from the Uruguay Round. She findsthat: (1) The changes in welfare are significantly affected by the structure of trade and distortions in the domestic economy. (2) Although many economies are hurt by increases in world prices, losses in terms of trade are small relative to total GDP. Only in a few countries does the estimated welfare change constitute more than 1 percent of GDP. (3) In several countries, the distortion effects are significantly larger than the terms-of-trade effects. In some cases, the distortion effects work in opposition to the terms-of-trade effects and are large enough to reverse the sign of the net welfare change. In short, removing policy distortions could convert the small loss in terms of trade to potential gains. But many least-developed, net food-importing countries did not use the Round to support domestic efforts at trade reform. As most studies show, most gains from multilateral liberalization come from the countries'own liberalization efforts, so countries that failed to liberalize their trade policy lost the opportunity for gains.

Suggested Citation

  • Ingco, Merlinda D., 1997. "Has agricultural trade liberalization improved welfare in the least-developed countries? Yes," Policy Research Working Paper Series 1748, The World Bank.
  • Handle: RePEc:wbk:wbrwps:1748
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    References listed on IDEAS

    as
    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. Brandao, Antonio Salazar P. & Martin, Will J., 1993. "Implications of agricultural trade liberalization for the developing countries," Agricultural Economics, Blackwell, vol. 8(4), pages 313-343, June.
    4. 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.
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    Cited by:

    1. Diaz-Bonilla, Eugenio & Reca, Lucio, 2000. "Trade and agroindustrialization in developing countries: trends and policy impacts," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 23(3), September.
    2. Bezuneh, Mesfin & Yiheyis, Zelealem, 2009. "Has Trade Liberalization Improved Food Availability in Developing Countries? An Empirical Analysis," 2009 Conference, August 16-22, 2009, Beijing, China 51136, International Association of Agricultural Economists.
    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.

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