The Political Economy of Agricultural Policy: Discussion

Abstract

The last decade has seen a surge of interest and literature in political economy by political scientists, economists, sociologists, and in the past several years agricultural economists and others concerned with agricultural and food sector issues. Much of this work has been in response to apparently perverse policy outcomes or public choice failures that have proved difficult to address through conventional economic theory and analysis. Perhaps the question that has received the most attention in this regard has been the paradox of developing countries typically taxing, while industrialized countries commonly subsidize, their agricultural sectors. The titles of both of these invited papers address other questions that are important to U.S. farm policy analysis. To begin, the Paarlberg paper explicitly asks whether there is anything uniquely to American farm policy. Paarlberg addresses this question by introducing the cosmopolitan model of Honma and Hayami and, by extension, related analyses byBalisacan and Roumasset, de Gorter and Tsur, and others. Paarlberg identifies several important limitations of these models. First, the cosmopolitan model has considerably greater difficulty in explaining intertemporal changes in levels of protection than it does in explaining cross-sectional and/or cross-commodity variations in protection levels. Typically, these models seek to explain agricultural protection levels as functions of structural economic and demographic variables (agriculture's proportion of GDP or the labor force, etc.), variables measuring comparative advantage in agriculture (such as input ratios), and binary variables to dummy out unique geographic or political influences. These (and other) factors are commonly shown to explain up to 70% or so of crosssectional variability in protection levels. However, this type of explanatory ability may considerably overstate our ability to understand the determinants of changes in protection levels over time, which are of primary interest from a policy-making perspective. Any number of specific examples could be ci ed in this regard: the recently completed U.S.-Canada Free Trade Agreement, the host of developing country policy reforms instituted in the 1980s, the ongoing GATT negotiations on reducing agricultural protectionism, and so on. At least the first two of these are