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Novel indicators of the trade and welfare effects of agricultural distortions in OECD countries

Author

Listed:
  • Anderson, Kym
  • Croser, Johanna
Abstract
Agricultural markets in OECD countries have long been highly distorted by government policies. Traditional weighted average aggregates of the price distortions involved, such as producer and consumer support estimates can be poor indicators of the trade restrictiveness and economic welfare losses associated with them, especially if a country's support estimates vary a lot across the product range. Certainly estimates of trade and welfare effects of price supports can be obtained from sector or economy-wide models using price elasticity estimates, but the results can be contentiousif there is no consensus on what model specification and elasticity parameters to use. This paper shows that, if there is a willingness to accept simple assumptions about elasticities, it is possible to generate indicators of the welfare and trade restrictiveness of agricultural policies using no more than the price and quantity data needed to generate producer and consumer support estimates. These new indexes thus provide an attractive supplement to the current policy monitoring regime developed by the OECD Secretariat.

Suggested Citation

  • Anderson, Kym & Croser, Johanna, 2010. "Novel indicators of the trade and welfare effects of agricultural distortions in OECD countries," Policy Research Working Paper Series 5404, The World Bank.
    • Handle: RePEc:wbk:wbrwps:5404
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    References listed on IDEAS

    as
    1. Hiau LooiKee & Alessandro Nicita & Marcelo Olarreaga, 2009. "Estimating Trade Restrictiveness Indices," Economic Journal, Royal Economic Society, vol. 119(534), pages 172-199, January.
    2. Tyers,Rod & Anderson,Kym, 2011. "Disarray in World Food Markets," Cambridge Books, Cambridge University Press, number 9780521172318, September.
    3. Kym Anderson & Johan Swinnen, 2008. "Distortions to Agricultural Incentives in Europe's Transition Economies," World Bank Publications - Books, The World Bank Group, number 6502.
    4. Kym Anderson & William A. Masters, 2009. "Distortions to Agricultural Incentives in Africa," World Bank Publications - Books, The World Bank Group, number 2607.
    5. Kym Anderson, 2010. "Global Distortions to Agricultural Markets: New Indicators of Trade and Welfare Impacts, 1960 to 2007," Centre for International Economic Studies Working Papers 2010-03, University of Adelaide, Centre for International Economic Studies.
    6. Croser, Johanna & Anderson, Kym, 2011. "Changing contributions of different agricultural policy instruments to global reductions in trade and welfare," World Trade Review, Cambridge University Press, vol. 10(3), pages 297-323, July.
    7. Teresa Serra & David Zilberman & Barry K. Goodwin & Allen Featherstone, 2006. "Effects of decoupling on the mean and variability of output," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 33(3), pages 269-288, September.
    8. Johanna L. Croser & Peter J. Lloyd & Kym Anderson, 2010. "How Do Agricultural Policy Restrictions on Global Trade and Welfare Differ Across Commodities?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(3), pages 698-712.
    9. Valdés, Alberto & Zietz, Joachim A., 1980. "Agricultural protection in OECD countries: its cost to less-developed countries," Research reports 21, International Food Policy Research Institute (IFPRI).
    10. Peter J. Lloyd & Johanna L. Croser & Kym Anderson, 2010. "Global Distortions to Agricultural Markets: Indicators of Trade and Welfare Impacts, 1960 to 2007," Review of Development Economics, Wiley Blackwell, vol. 14(2), pages 141-160, May.
    11. Peter J. Lloyd & Johanna L. Croser & Kym Anderson, 2009. "Global Distortions to Agricultural Markets: New Indicators of Trade and Welfare Impacts, 1955 to 2007," School of Economics and Public Policy Working Papers 2009-13, University of Adelaide, School of Economics and Public Policy.
    12. Kym Anderson, 2009. "Distortions to Agricultural Incentives : A Global Perspective, 1955-2007," World Bank Publications - Books, The World Bank Group, number 9436.
    13. Anderson, Kym & Lattimore, Ralph G. & Lloyd, Peter J. & MacLaren, Donald, 2007. "Distortions to Agricultural Incentives in Australia and New Zealand," 2007 Conference (51st), February 13-16, 2007, Queenstown, New Zealand 10407, Australian Agricultural and Resource Economics Society.
    14. Douglas A. Irwin, 2010. "Trade Restrictiveness and Deadweight Losses from US Tariffs," American Economic Journal: Economic Policy, American Economic Association, vol. 2(3), pages 111-133, August.
    15. Anderson, Kym, 2009. "Five Decades of Distortions to Agricultural Incentives," Agricultural Distortions Working Paper Series 48742, World Bank.
    16. Kym Anderson & Ernesto Valenzuela, 2007. "Do Global Trade Distortions Still Harm Developing Country Farmers?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 143(1), pages 108-139, April.
    17. James E. Anderson & J. Peter Neary, 2005. "Measuring the Restrictiveness of International Trade Policy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262012200, April.
    18. Kym Anderson & Will Martin, 2009. "Distortions to Agricultural Incentives in Asia," World Bank Publications - Books, The World Bank Group, number 2611.
    19. Anderson, Kym & Swinnen, Johan F.M., 2009. "Distortions to Agricultural Incentives in Eastern Europe and Central Asia," Agricultural Distortions Working Paper Series 48624, World Bank.
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    Cited by:

    1. Nith, Kosal & Ly, Singhong, 2018. "Reinvigorating Cambodian agriculture: Transforming from extensive to intensive agriculture," MPRA Paper 93091, University Library of Munich, Germany, revised 23 Dec 2018.
    2. David Laborde & Will Martin & Dominique van der Mensbrugghe, 2017. "Measuring the Impacts of Global Trade Reform with Optimal Aggregators of Distortions," Review of International Economics, Wiley Blackwell, vol. 25(2), pages 403-425, May.
    3. Nith, Kosal & Ly, Singhong, 2018. "Reinvigorating Cambodian agriculture: Transforming from extensive to intensive agriculture," MPRA Paper 93086, University Library of Munich, Germany, revised 23 Dec 2018.
    4. Lana Awada & Peter W. B. Phillips, 2021. "The distribution of returns from land efficiency improvement in multistage production systems," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 69(1), pages 73-92, March.
    5. Urban, Kirsten & Brockmeier, Martina & Jensen, Hans Grinsted, 2015. "Evaluating the Effect of Domestic Support on International Trade: A Mercantilist Trade Restrictiveness Approach," Conference papers 332615, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    6. Kingwell, Ross & Islam, Nazrul & Xayavong, Vilaphonh, 2020. "Farming systems and their business strategies in south-western Australia: A decadal assessment of their profitability," Agricultural Systems, Elsevier, vol. 181(C).

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    More about this item

    Keywords

    Economic Theory&Research; Markets and Market Access; Emerging Markets; Crops&Crop Management Systems; Free Trade;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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