Agricultural and Trade Policy Reforms in Latin America: Impacts on Markets and Welfare

Abstract

Farm earnings in Latin America have been depressed by pro-urban and anti-trade biases in national policies and by agricultural support policies of richer countries. These policies have reduced economic welfare, hampered trade and growth, and may well have added to income inequality. Since the 1980s, however, the region has reduced its sectoral and trade policy distortions; and some high-income countries also have begun reducing market-distorting aspects of their farm policies. This paper synthesizes results from a World Bank project that provides: price-comparison based measures of the extent to which national policies have changed farmersÂ’ price incentives; partial equilibrium indexes of the impact of farm policies on trade and economic welfare; general equilibrium estimates of trade, welfare and poverty effects of global reforms retrospectively and prospectively; comparisons with similar estimates for Asia, Africa and high-income countries; and a discussion of prospects for pro-poor policy reform of agricultural price and trade policies.