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Measuring Agricultural Policy Bias: General Equilibrium Analysis of Fifteen Developing Countries

Author

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  • Jensen, Henning Tarp
  • Sherman, Robinson
  • Tarp, Finn
Abstract
The measurement issue is the key issue in the literature on trade policy-induced agricultural price incentive bias. This paper introduces a general equilibrium effective rate of protection (GE-ERP) measure, which extends and generalizes earlier partial equilibrium nominal protection measures. For the 15 sample countries, the results indicate that the agricultural price incentive bias, which was generally perceived to exist during the 1980s, was largely eliminated during the 1990s. The results also demonstrate that general equilibrium effects and country-specific characteristics – including trade shares and intersectoral linkages – are crucial for determining the sign and magnitude of trade policy bias. The GE-ERP measure is therefore uniquely suited to capture the full impact of trade policies on agricultural price incentives. A Monte Carlo procedure confirms that the results are robust with respect to tradability assumptions.

Suggested Citation

  • Jensen, Henning Tarp & Sherman, Robinson & Tarp, Finn, 2008. "Measuring Agricultural Policy Bias: General Equilibrium Analysis of Fifteen Developing Countries," MPRA Paper 61489, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:61489
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    References listed on IDEAS

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    1. Jensen, Henning Tarp & Robinson, Sherman & Tarp, Finn, 2002. "General equilibrium measures of agricultural policy bias in fifteen developing countries," TMD discussion papers 105, International Food Policy Research Institute (IFPRI).
    2. Henning Tarp Jensen & Finn Tarp, 2002. "CGE Modelling and Trade Policy: Reassessing The Agricultural Bias," Journal of Agricultural Economics, Wiley Blackwell, vol. 53(2), pages 383-405, July.
    3. Jaime de Melo & Sherman Robinson, 2015. "Trade Policy And Resource Allocation In The Presence Of Product Differentiation," World Scientific Book Chapters, in: Modeling Developing Countries' Policies in General Equilibrium, chapter 16, pages 357-365, World Scientific Publishing Co. Pte. Ltd..
    4. T. N. Srinivasan & Jagdish Bhagwati, 2001. "Outward-Orientation and Development: Are Revisionists Right?," Palgrave Macmillan Books, in: Deepak Lal & Richard H. Snape (ed.), Trade, Development and Political Economy, chapter 1, pages 3-26, Palgrave Macmillan.
    5. Krueger, Anne O & Schiff, Maurice & Valdes, Alberto, 1988. "Agricultural Incentives in Developing Countries: Measuring the Effect of Sectoral and Economywide Policies," The World Bank Economic Review, World Bank, vol. 2(3), pages 255-271, September.
    6. Kym Anderson & Will Martin & Dominique van der Mensbrugghe, 2006. "Would Multilateral Trade Reform Benefit Sub-Saharan Africans?," Journal of African Economies, Centre for the Study of African Economies, vol. 15(4), pages 626-670, December.
    7. David Abler & Adrián Rodríguez & James Shortle, 1999. "Parameter Uncertainty in CGE Modeling of the Environmental Impacts of Economic Policies," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 14(1), pages 75-94, July.
    8. Agenor, Pierre-Richard & Nabli, Mustapha K. & Yousef, Tarik & Jensen, Henning Tarp, 2007. "Labor market reforms, growth, and unemployment in labor-exporting countries in the Middle East and North Africa," Journal of Policy Modeling, Elsevier, vol. 29(2), pages 277-309.
    9. Romeo M. Bautista & Sherman Robinson & Finn Tarp & Peter Wobst, 2001. "Policy Bias and Agriculture: Partial and General Equilibrium Measures," Review of Development Economics, Wiley Blackwell, vol. 5(1), pages 89-104, February.
    10. Kym Anderson, 2006. "Reducing Distortions to Agricultural Incentives: Progress, Pitfalls, and Prospects," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(5), pages 1135-1146.
    11. C. Arndt & H.T. Jensen & S. Robinson & F. Tarp, 2000. "Marketing Margins and Agricultural Technology in Mozambique," Journal of Development Studies, Taylor & Francis Journals, vol. 37(1), pages 121-137, October.
    12. Krueger, Anne O, 1998. "Why Trade Liberalisation Is Good for Growth," Economic Journal, Royal Economic Society, vol. 108(450), pages 1513-1522, September.
    13. Devarajan, Shantayanan & Sussangkarn, Chalongphob, 1992. "Effective Rates of Protection When Domestic and Foreign Goods Are Imperfect Substitutes: The Case of Thailand," The Review of Economics and Statistics, MIT Press, vol. 74(4), pages 701-711, November.
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    Cited by:

    1. Kym Anderson, 2013. "Agricultural price distortions: trends and volatility, past, and prospective," Agricultural Economics, International Association of Agricultural Economists, vol. 44(s1), pages 163-171, November.
    2. Emiko Fukase & Will Martin, 2016. "Agro-processing and horticultural exports from Africa," WIDER Working Paper Series 174, World Institute for Development Economic Research (UNU-WIDER).
    3. Tony Addison, 2015. "Thirty years in Africa's development: From structural adjustment to structural transformation?," WIDER Working Paper Series wp-2015-119, World Institute for Development Economic Research (UNU-WIDER).
    4. Cardoso, Debora Freire & Teixeira, Erly Cardoso & Gurgel, Angelo Costa & Castro, Eduardo Rodrigues de, 2011. "Effects of the rural credit subsidy on economic growth and welfare of Brazilian regions," Working Papers in Applied Economics 114464, Universidade Federal de Vicosa, Departamento de Economia Rural.
    5. McKay, Andy & Tarp, Finn, 2014. "Distributional impacts of the 2008 global food price spike in Vietnam," WIDER Working Paper Series 030, World Institute for Development Economic Research (UNU-WIDER).
    6. Douillet, Mathilde, 2012. "Trade policy reforms in the new agricultural context: Is regional integration a priority for Sub-Saharan African countries agricultural-led industrialization? Insights from a global computable general," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126546, International Association of Agricultural Economists.
    7. Devarajan, Shantayanan & Robinson, Sherman, 2013. "Contribution of Computable General Equilibrium Modeling to Policy Formulation in Developing Countries," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 277-301, Elsevier.
    8. Emiko Fukase & Will Martin, 2016. "Agro-processing and horticultural exports from Africa," WIDER Working Paper Series wp-2016-174, World Institute for Development Economic Research (UNU-WIDER).
    9. Ranjit Kumar & K. V. Raju, 2018. "Leveraging Policies for Self Sufficiency in Pulses in India," Journal of Development Policy and Practice, , vol. 3(2), pages 155-178, July.
    10. Tony Addison, 2015. "Thirty years in Africa's development: From structural adjustment to structural transformation?," WIDER Working Paper Series 119, World Institute for Development Economic Research (UNU-WIDER).
    11. Andy McKay & Finn Tarp, 2014. "Distributional Impacts of the 2008 Global Food Price Spike in Vietnam," WIDER Working Paper Series wp-2014-030, World Institute for Development Economic Research (UNU-WIDER).

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    More about this item

    Keywords

    CGE; Agricultural Policy; Food Policy;
    All these keywords.

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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