Contributions of trade reforms to agriculture’s globalisation

Abstract

For decades, earnings from farming in many developing countries have been depressed by a pro-urban bias in own-country policies, as well as by governments of richer countries favouring their farmers with import barriers and subsidies. Both sets of policies reduced national and global economic welfare and inhibited agricultural trade and global economic growth. They almost certainly added to inequality and poverty in developing countries, since three-quarters of the world’s billion poorest people depend directly or indirectly on farming for their livelihood. During the past three decades, however, numerous developing country governments have reduced their sectoral and trade policy distortions, while some high-income countries also have begun reducing market-distorting aspects of their farm policies. This chapter surveys the changing extent of policy distortions to prices faced by farmers over the past half-century in high-income, developing and transition economies. It also provides a summary of new empirical estimates from a global economy-wide model that show how much could be gained by removing remaining interventions. It concludes with words of caution as to what could occur if a failure to conclude the WTO’s Doha Round of multilateral trade negotiations led to protection growth in emerging economies.