India: Shadow WTO agricultural domestic support notifications

"In this study, we examined India's domestic support policies to understand their classification and measurement for the purposes of official World Trade Organization (WTO) notifications. We then employed the underlying methods to prepare shadow notifications of India's domestic support for 1998-2005. Following that, we explored alternative support-definition scenarios and their possible effects on shadow notifications. Preliminary support estimates for 2006-2007 and a projection for 2015 are also provided with a discussion on how the latest WTO (2008) draft modalities are likely to impact India's domestic support. India's official notifications began in 1995 with green box support of nearly US$2 billion and limited use of special and differential treatment. The product-specific aggregate measure of support (AMS) was negative because external reference prices were larger than minimum support prices. Nonproduct-specific AMS, by way of fertilizer, electricity, irrigation, credit, and seed subsidies, accounted for about 7 percent of the value of agricultural production in 1995. In subsequent notifications, for 1996 and 1997, several key changes were observed. The first was the transfer of 80 percent of fertilizer, irrigation, and electricity subsidies from nonproduct-specific AMS to special and differential treatment of low-income and resource-poor farmers. Product-specific AMS remained negative, but the value of production was replaced by eligible production, which was set equal to quantities procured by public agencies in 1996 and 1997. Shadow notifications, based on our understanding of the underlying methods, showed that green box support had grown to nearly US$8.0 billion in 2005. Estimates of input subsidies to low-income and resource-poor producers declined between 1998 and 2002, but they amounted to about US$4.5 billion or 4 percent of the value of agricultural production in 2005. Product-specific AMS remained negative through 2005 mostly because of the wide gap between external reference prices and minimum support prices. Nonproduct-specific AMS accounted for about 1 percent of the annual value of agricultural production for 1998-2005. Alternative support-definition and measurement scenarios showed a possible increase in product-specific AMS. However, reallocating input subsidies from special and differential treatment to nonproduct-specific AMS would only eliminate some of the slack in the latter's de minimis exemption. With India's general elections expected in early 2009, the immediate future includes popular policies such as credit subsidies and significant growth in minimum support prices. Nevertheless, non-product-specific AMS would not likely exceed the limits proposed in the Doha Round (that is, 10 percent of value of production) even with popular policies. However, product-specific AMS would turn positive, especially in cereals, with high growth in support prices and the appreciation of Rupee as seen in recent years. Projections for 2015 suggest that de minimis exemptions would be about US$16 billion each for product-specific and non-product-specific AMS, giving India ample flexibility in domestic support policies." from authors' abstractAgricultural policies, WTO Doha round, WTO compliance, Notification of domestic support, India agricultural support policies, Globalization, Markets,

Trade Costs in U.S. Food Manufacturing Industries

This study allows for variation of trade costs among regions, since a single trade costs measure may not appreciate the large number and diverse regions of the United States through which trade in food manufacturing occurs.trade costs, gravity model, regional development, food manufacturing industries, Agricultural and Food Policy, Consumer/Household Economics, Industrial Organization, International Development, International Relations/Trade, Production Economics,

Sources of the rural-urban productivity disparities and the policy implications on rural development in Korea

This paper investigates the effect of trade cost changes on the spatial productivity distribution in Korea. Data on gross value added and primary factors for 163 spatial units during 2000-2005 are assembled to estimate local TFP using a value-added function. In our application, we control for agglomeration economies so as to identify factors shifting the regional raw-productivity distribution over time. The TFP estimation results show that the Korean regional economy exhibits constant returns to scale, along with significant localization economies. We find that and trade costs reduction and infrastructure improvement significantly shift to the right all percentile values of the regional productivity distribution, while amenity does not affect the movement of the distribution. An important policy implication of this study is that a country pursuing foreign market opportunities to boost economic growth and to raise incomes, like Korea, should also consider the consequent spatial realignment of resources. Also, productivity enhancements along with transfers to alleviate adjustments to trade-cost changes cannot be space blind.agglomeration economies, spatial productivity distribution, trade cost, Community/Rural/Urban Development, F1, R3,

PATENTS, R&D, AND MARKET STRUCTURE IN THE U.S. FOOD PROCESSING INDUSTRY

This study investigates the effects of market structure and research and development (R&D) on the innovation activities of firms. Fixed and random effects count data models are estimated with firm-level data for the U.S. food processing industry. Results show a positive association between patents and R&D, and patents and market structure, suggesting that firms which exhibit noncompetitive behavior are likely to develop new products and processes. Significant intra-industry spillovers of knowledge are identified using industry R&D. For this industry, deadweight losses from imperfect competition may be offset by greater product variety and quality of food products for consumers.Research and Development/Tech Change/Emerging Technologies,

Productivity, Geography, and the Export Decision of Chilean Farms

This article analyzes the export participation of Chilean farms and the relative importance of farm-specific and geographic characteristics in this decision. An export behavior model is estimated using data on 8,284 Chilean farms and a two-stage conditional maximum likelihood procedure. Farm efficiency has a relatively stronger effect than the combined effect of geographic characteristics in increasing the probability of export participation. Farms with skilled (managerial) labor and in regions with higher human capital also have a relatively higher probability of producing for the export market. However, for geographic characteristics to positively affect export participation, farms must achieve a minimum level of efficiency.Agricultural Trade, Chile, Export Participation, Geography, Productivity., Farm Management, International Relations/Trade, F11, O13, O18,

How Do Location Decisions of Firms and Households Affect Economic Development in Rural America?

This paper examines the causes of spatial inequalities in economic development across rural America. A theoretical model is developed to analyze interactions between location decisions of firms and households as they are affected by natural endowments, accumulated human and physical capital, and economic geography. Based on the theoretical analysis, an empirical model is specified to quantify the effect of these factors on key indicators of economic development across counties in the United States. Preliminary results suggest that households are willing to trade better amenities for lower income, and firms take advantage of this tradeoff by locating in areas with better climate and more recreational opportunities. In equilibrium, counties with better climate and more creational opportunities have lower income and more employment opportunities. Accumulated human and physical capital also significantly affect economic development across counties in the United States. Counties with more accumulated human and physical capital have higher income, more employment opportunities, and high development density. Remoteness has a negative effect on every measure of economic development indicator. It reduces income, employment, housing prices and total developed areas. Implications of the results for policy development to promote economic prosperity in rural America are discussed.Community/Rural/Urban Development,

Global Productivity Distribution and Trade in Processed Food Industries

The emerging literature on firm heterogeneity suggests that trade liberalization raises industry average productivity by forcing its least productive firms to exit. Consequently, resources and market shares are reallocated toward the industry¡¯s more productive firms. We extend firm-heterogeneity models of international trade to a cross-country setting to investigate the effects of trade liberalization on global productivity distribution, and resource and market share reallocation in processed food industries. We approximate the global productivity distribution using a kernel density estimator in 5 processed food industries for every period during 1993-2000. We find that the global productivity distribution shifts to the right with liberalized international trade. Moreover, countries with faster productivity growth than the global average benefit from trade liberalization by acquiring a larger share of global markets and resources.Agribusiness, International Relations/Trade,

WORLD TRADE ISSUES AND FOOD SECURITY

While economic growth has lifted more people from poverty than in any prior period, world market shocks of the 1970s and 1980s have caused a massive realignment in country policies, and future growth in population and income are expected to place heavy burdens on world resources. Recently, it has been suggested that a food crisis may be forthcoming as food production per capita has stagnated, risking a reversal of the long-term decline in the real price of food. This paper focuses on food security in this context, and concludes that a rise in the real price of food is likely, but not of a magnitude to create a food crisis. Nevertheless, those already in poverty may be placed at additional risk of nutritional deprivation. Policies for alleviating this possibility are available, but they entail more than just increasing food production.Food Security and Poverty, International Relations/Trade,

General Equilibrium Analysis of Supply and Factor Returns in U.S. Agriculture, 1949-91

General equilibrium - open economy trade theory and time series data on the US agricultural sector are used to provide insights into the structure of agricultural supply, factor returns and linkages to the rest of the economy. Output expansion and changes in factor rental rates depend on relative factor intensities. Theoretically consistent price elasticities of supply and factor rental rates are also obtained. The effect of the rest of the economy, particularly the increase in price of services, is found to have relatively large negative impacts on agriculture. The static effects on growth of supply and factor rental rates tend to be dominated by rate effects which are shown to have strong positive effects on returns to family labor. J.E.L. classification numbers: 013, 030, QllInternational Relations/Trade,

SOURCES OF GROWTH IN U.S. GDP AND ECONOMY-WIDE LINKAGES TO THE AGRICULTURAL SECTOR

Sources of growth in U.S. gross domestic product (GDP) are analyzed in a general equilibrium, open economy framework using time-series data. Contributions from labor and capital account for 75% of the economyÂ’'s average growth, with total factor productivity (TFP) accounting for the remainder. Changes in the domestic terms of trade appear to be biased in favor of the services sector and against the agricultural and industrial sectors. A number of Rybczynski and Stolper-Samuelson-like linkages between the agricultural sector and the rest of the economy are identified. Labor-using technological change and favorable terms of trade appear to be the major contributors to the growth of the services sector. These changes have led to a decline in the competitiveness of the industrial and agricultural sectors for economy-wide resources. Technological change has tended to be neutral toward the production of farm output.Public Economics,