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Transition problems in economic reform : agriculture in the Mexico - U.S. free trade agreement

  • Levy, Santiago
  • van Wijnbergen, Sweder

The authors use Mexican agriculture as a case study to analyze the transition problems that arise in most major economic reforms. They 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 redistribution aspects of policy reform in the presence of realistic limits on available intervention instruments. They emphasize that adjustment should focus on increasing the value of assets owned by the groups affected, and not on direct income transfers of programs targeted to output or other characteristics controlled by the beneficiaries. That is, they contend that adjustment should betargeted to improving what people have, as opposed to what people do.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 967.

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Date of creation: 31 Aug 1992
Date of revision:
Handle: RePEc:wbk:wbrwps:967
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  1. Peter A. Diamond, 1982. "Protection, Trade Adjustment Assistance, and Income Distribution," NBER Chapters, in: Import Competition and Response, pages 123-150 National Bureau of Economic Research, Inc.
  2. Feenstra, R.C. & Rose, A.K., 1992. "Trade with Mexico and Water Use in California Agriculture," Papers 399, California Davis - Institute of Governmental Affairs.
  3. Tornell, Aaron, 1991. "Time Inconsistency of Protectionist Programs," The Quarterly Journal of Economics, MIT Press, vol. 106(3), pages 963-74, August.
  4. Paul Krugman, 1982. "Trade in Differentiated Products and the Political Economy of Trade Liberalization," NBER Chapters, in: Import Competition and Response, pages 197-222 National Bureau of Economic Research, Inc.
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