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Agricultural Distortion Patterns Since the 1950s: What Needs Explaining?

Kym Anderson (), Johanna Croser (), Damiano Sandri () and Ernesto Valenzuela ()
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Johanna Croser: School of Economics, University of Adelaide

No 2010-13, Centre for International Economic Studies Working Papers from University of Adelaide, Centre for International Economic Studies

Abstract: This paper summarizes a new database that sheds light on the impact of trade-related policy developments over the past half century on distortions to agricultural incentives and thus also to consumer prices for food in 75 countries spanning the per capita income spectrum. Price-support policies of advanced economies hurt not only domestic consumers and exporters of other products but also foreign producers and traders of farm products, and they reduce national and global economic welfare. On the other hand, the governments of many developing countries have directly taxed their farmers over the past half-century, both directly (e.g., export taxes) and also indirectly via overvaluing their currency and restricting imports of manufactures. Thus the price incentives facing farmers in many developing countries have been depressed by both own-country and other countriesÂ’ agricultural price and international trade policies. We summarize these and realted stylized facts that can be drawn from a new World Bank database that is worthy of the attention of political economy theorists, historians and econometricians. These indicators can be helpful in addressing such questions as the following: Where is there still a policy bias against agricultural production? To what extent has there been overshooting in the sense that some developing-country food producers are now being protected from import competition along the lines of the examples of earlier-industrializing Europe and Japan? What are the political economy forces behind the more-successful reformers, and how do they compare with those in less-successful countries where major distortions in agricultural incentives remain? And what explains the pattern of distortions across not only countries but also industries and in the choice of support or tax instruments within the agricultural sector of each country?

Keywords: Political economy; agricultural price and trade policies (search for similar items in EconPapers)
JEL-codes: F13 F59 H20 N50 O13 Q18 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr and nep-his
Date: 2010-05
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Working Paper: Agricultural Distortion Patterns Since the 1950s: What Needs Explaining? (2009) Downloads
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