Agricultural Distortions in Sub-Saharan Africa: Trade and Welfare Indicators, 1961 to 2004

For decades, agricultural price and trade policies in Sub-Saharan Africa hampered farmers’ contributions to economic growth and poverty reduction. While there has been much policy reform over the past two decades, the injections of agricultural development funding, together with on-going regional and global trade negotiations, have brought distortionary policies under the spotlight once again. A key question asked of those policies is: how much are they still reducing national economic welfare and trade? Economy-wide models are able to address that question, but they are not available for many poor countries. Even where they are, typically they apply to just one particular previous year and so are unable to provide trends in effects over time. This paper provides a partial-equilibrium alternative to economy-wide modelling, by drawing on a modification of so-called trade restrictiveness indexes to provide theoretically precise indicators of the trade and welfare effects of agricultural policy distortions to producer and consumer prices over the past half-century. We generate time series of country level indices, as well as Africa-wide aggregates. We also provide annual commodity market indices for the region, and we provide a sense of the relative importance of the key policy instruments used.Distorted incentives, agricultural price and trade policies, trade restrictiveness index, International Development,

Changing contributions of different agricultural policy instruments to global reductions in trade and welfare

Trade negotiators and policy advisors are keen to know the relative contribution of different farm policy instruments to international trade and economic welfare. Nominal rates of assistance or producer support estimates are incomplete indicators, especially when (especially in developing countries) some commodities are taxed and others are subsidized in which case positive contributions can offset negative contributions. This paper develops and estimates a new set of more-satisfactory indicators to examine the relative contribution of different farm policy instruments to reductions in agricultural trade and welfare, drawing on recent literature on trade restrictiveness indexes and a recently compiled database on distortions to agricultural prices for 75 developing and high-income countries over the period 1960 to 2004. Results confirm earlier findings that border taxes are the dominant instrument affecting global trade and welfare, but they also suggest declines in export taxes contributed nearly as much as cuts in import protection to global welfare gains from agricultural policy reforms since the 1980s.Distorted incentives, agricultural price and trade policies, trade restrictiveness index, International Relations/Trade, F13, F14, F15, N57, Q17, Q18,

Distribution of Agricultural NRAs across Countries and Products, 1955-84 and 1985-2007

The global database developed as an integral part of the World Bank's research project on Distortions to Agricultural Incentives, which is publicly available at www.worldbank.org/agdistortions, provides around 30,000 estimates of nominal rates of assistance to agricultural industries (NRAs) and associated consumer tax equivalents for 75 countries that together account for between 90 and 95 percent of the world’s population, farmers, agricultural output and total GDP. They also account for more than 85 percent of farm production and employment in each of Africa, Asia, Latin America and the transition economies of Europe and Central Asia as well as all OECD countries. More than 70 products are included (an average of 11 per country), which represents around 70 percent of the gross value of agricultural production in each of the focus countries, and just under two-thirds of global farm production valued at undistorted prices over the period covered. Not all countries had data for all of the entire 1955-2007 period, but the average number of years covered is 41 per country. This paper provides details of the coverage of the database. It also summarizes the distributions of the NRAs by showing two sets of Box plots for 1955-84 and 1985-2007, one set for various regions of the world, the other for all the covered products for each focus country.Distorted incentives, agricultural and trade policy reforms, national agricultural development, Agricultural price and trade policies, nominal rates of assistance, Agricultural and Food Policy, International Relations/Trade, F13, F14, Q17, Q18, F59, H20, N50, O13,

Global Distortions to Agricultural Markets: New Indicators of Trade and Welfare Impacts, 1955 to 2007

Despite recent reforms, world agricultural markets remain highly distorted by government policies. Traditional indicators of those price distortions can be poor guides to the policies? economic effects. Recent theoretical literature provides indicators of trade and welfare-reducing effects of price and trade policies which this paper builds on to develop more-satisfactory indexes. The authors exploit a new Agricultural Distortion database to generate estimates of them for developing and high-income countries over the past half century. These better approximations of the trade and welfare effects of sector policies are generated without a formal model of global markets or even price elasticity estimates.Distorted incentives, agricultural and trade policies, trade restrictiveness index

Global distortions to agricultural markets : new indicators of trade and welfare impacts, 1955 to 2007

Despite recent reforms, world agricultural markets remain highly distorted by government policies. Traditional indicators of those price distortions can be poor guides to the policies'economic effects. Recent theoretical literature provides indicators of trade and welfare-reducing effects of price and trade policies which this paper builds on to develop more-satisfactory indexes. The authors exploit a new Agricultural Distortion database to generate estimates of them for developing and high-income countries over the past half century. These better approximations of the trade and welfare effects of sector policies are generated without a formal model of global markets or even price elasticity estimates.Currencies and Exchange Rates,Economic Theory&Research,Agribusiness,Markets and Market Access,Trade Policy

How Do Agricultural Policy Restrictions to Global Trade and Welfare Differ Across Commodities?

For decades the worldÂ’s agricultural markets have been highly distorted by national government policies, but very differently for different commodities such that a ranking of weighted average nominal rates of assistance across countries can be misleading as an indicator of the trade or welfare effects of policies affecting global markets. This article develops a new set of more-satisfactory indicators, drawing on the recent literature on trade restrictiveness indexes. It then estimates those two indicators for each of 28 key agricultural commodities from 1960 to 2004, based on a sample of 75 countries that together account for more than three-quarters of the worldÂ’s production of those agricultural commodities.distorted commodity markets, agricultural price and trade policies, trade restrictiveness index

Global Distortions to Agricultural Markets: New Indicators of Trade and Welfare Impacts, 1955 to 2007

Despite reforms over the past quarter-century, world agricultural markets remain highly distorted by government policies. Traditional indicators of those price distortions such as the nominal rate of assistance and consumer tax equivalent provide measures of the degree of intervention, but they can be misleading as indicators of the true effects of those policies. By drawing on recent theoretical literature that provides indicators of the trade- and welfare-reducing effects of price and trade policies, this paper develops more-satisfactory indexes for capturing distortions to agricultural incentives. It then exploits the Agricultural Distortion database recently compiled by the World Bank to generate estimates of them for both developing and high-income countries over the past half century, based on a sample of 75 countries that together account for all but one-tenth of the world’s population, GDP and agricultural production. While they are still only partial equilibrium measures, they provide a much better approximation of the true trade and welfare effects of sectoral policies without needing a formal model of global markets or even price elasticity estimates.Distorted incentives, agricultural and trade policies, trade restrictiveness index,

Welfare- and trade-based indicators of national distortions to agricultural incentives

Distorted incentives, agricultural and trade policy reforms, national agricultural development, Agricultural and Food Policy, International Relations/Trade, F13, F14, Q17, Q18,

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

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 countries’ agricultural price and international trade policies. We summarize these and related 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?Distorted incentives, agricultural and trade policy reforms, national agricultural development, Political economy, agricultural price and trade policies, Agricultural and Food Policy, International Relations/Trade, F13, F14, Q17, Q18, F59, H20, N50, O13,

Global Distortions to Key Agricultural Commodity Markets

Distorted incentives, agricultural and trade policy reforms, national agricultural development, Agricultural and Food Policy, International Relations/Trade, F13, F14, Q17, Q18,