The impact of foreign trade policy on food independence for separate commodity groups: Methodological aspects

Abstract

The article considers the problem of the impact of foreign trade policy and external environment (world trade conditions) on the food independence of the country. The aim of the study is to develop a toolkit to quantify the impact of foreign trade policy on the indicator of food self-sufficiency in certain commodity groups of food and agricultural raw materials. The study is based on methodological approaches to assess the effect of import and export prices transfer in domestic prices under imperfect substitution and imperfect transformation. Imperfect substitution of the domestic and imported products on the domestic market and imperfect transformation of food flows between domestic and foreign markets are largely a consequence of the heterogeneity of commodity groups both on the import and export side, and domestic consumption. The reasons for heterogeneity of commodity groups are considered and their classification is given. In particular, the commodity groups of import substitution and export-oriented commodity groups are distinguished. For each of them the equilibrium conditions of supply and demand for domestic products on the domestic market, which have a significant impact on the formation of domestic prices, are considered. The effect of export and import prices transfer on aggregate demand (domestic and imported goods composite on the domestic market) and aggregate supply (domestic products composite for external and domestic markets) is shown. A toolkit is proposed to analyze the impact of "perturbations" — small deviations of exogenous parameters of foreign trade policy on food independence by separate commodity groups. A qualitative analysis of the impact of import tariffs, export subsidies and export duties, as well as world prices on the indicator of food self-sufficiency is given.