Agricultural Liberalization Research Articles

Virtual water flows and trade liberalization

The linkages between agricultural trade and water resources need to be identified and analyzed to better understand the potential impacts that a full liberalization, or lack thereof, will have on water resources. This paper examines trade of virtual water embodied in agricultural products for most countries of the world. The main purpose of the paper, however, is to examine the impact of trade liberalization on virtual-water trade in the future. Based on a simulation of global agricultural trade, a scenario of full liberalization of agriculture was used to assess the net effect of virtual water flows from the relocation of meat and cereals' trade. The paper also identifies the main reasons behind the changes in the magnitude and direction of the net virtual water trade over time, and shows that virtual water trade flows are independent of water resource endowments, contrary to what the Heckscher-Ohlin Theorem states. Finally, based on a formal model, some input demand functions at the country level are estimated. The estimates of the income and agricultural support elasticities of demand for import of virtual water have the expected sign, and are statistically significant. Variables found to have some explanatory power of the variance of virtual water imports are average income; population; agriculture as value added; irrigated area, and exports of goods and services.

Liberalization of the Agricultural Sector in Northeast Asia: The Effects of the Doha Development Agenda

Despite its importance, the Doha Development Agenda (DDA) has not been successful so far. Although negotiations about agricultural-sector trade liberalization have been built into the agenda of the DDA, the views of countries within the Cairns group are not easily reconciled with those of non–Cairns group countries. This paper examines the quantitative effects of liberalization of the agricultural sector in Northeast Asia based on the proposal of Stuart Harbinson, chairman of WTO's agriculture negotiating committee. The simulations undertaken here suggest that welfare gains from partial agricultural liberalization would be relatively modest in China (US$59 million), South Korea (US$687 million), and Japan (US$2.4 billion). However, the welfare distribution would be very uneven in South Korea and Japan. Most of the welfare losses would originate from impacts on rice farmers in these two countries, and losses would be politically difficult to accept. If rice were to be treated as a strategic product, the uneven welfare distribution would be considerably mitigated.

International Institutions and Issue Linkage: Building Support for Agricultural Trade Liberalization

This article explains how the institutional context of international negotiations influences their outcomes. I argue that issue linkage counteracts domestic obstacles to liberalization by broadening the negotiation stakes. Institutions bolster the credibility of the linkage to make it more effective. I test the argument in the agricultural sector, which has been among the most difficult sectors for governments to liberalize. Statistical analysis of U.S. negotiations with Japan and the EU from 1970 to 1999 indicates that an institutionalized linkage between agricultural and industrial issues encourages agricultural liberalization in both Japan and Europe. Through case studies of key negotiations, I first examine why countries choose to link issues, then show how the linkage changes interest group mobilization and shifts the policy process to promote liberalization.

Agricultural Trade Liberalization and Poverty Dynamics in Three Developing Countries

Many developing countries implemented sweeping agricultural reforms over the last decade. Reforms have included the removal of quotas and price controls, changes in international trade barriers, and the commercialization and privatization of state marketing boards for key crops. These reforms have often generated intense criticism from groups claiming that they hurt poor farmers and poor households. This concern has generated an extensive literature on the economics of agricultural trade reform in developing countries, much of which has focused on explaining the large variations in supply response across countries, regions and households (e.g., Key, Sadoulet, and De Janvry). In addition, anumber of papers have attempted to simulate the impact on poverty using household survey data and actual or predicted price changes (e.g., Chen and Ravallion). However, in many cases the true impact of agricultural reform is difficult to determine. In part this is because the analysis is based upon household surveys at a single point in time, so that the final (post-adjustment) consequences upon individual households are unknown. Also, even where observations are available over time, it has so far proved difficult to disentangle the effects of trade and agricultural liberalization from other contemporary shocks…(This abstract was borrowed from another version of this item.)

Spatial Integration of Wheat Markets in India: Evidence from Cointegration Tests

Using the maximum likelihood method of cointegration, this paper empirically evaluates intra-state and inter-state spatial integration of wheat markets in India. The cointegration tests provide strong evidence in favour of spatial integration of the regional wheat markets. Even though the regional markets are geographically dispersed, the prices across different market centres within and across the selected states have exhibited long-run spatial linkages, suggesting that all the exchange locations are integrated and the prices provide relevant market signals. There are several implications of these results for agricultural price policy and food market liberalization programmes.

Agricultural trade policies in the new millennium

Agricultural trade policies in the new millennium

Marketing Reform? The Rise and Fall of Agricultural Liberalisation in Tanzania

This article argues that the liberalisation of Tanzanian export agriculture from the early 1990s to the present has failed to take place to the extent claimed by the Tanzanian government and donor agencies. While internal food markets have largely been liberalised, donor–inspired attempts to liberalise export crop markets have been seriously undermined by the political–bureaucratic class. As in other countries undergoing adjustment under World Bank/IMF programmes, a combination of local vested interests and concerns with the ‘rigged rules and double standards’ of global commodity markets has led to a systematic but under–reported backlash against liberalisation. Tanzania's current status as a star HIPC/PRSP performer is belied by a growing rejection, whether principled or opportunistic, of the liberalisation project.

Patterns of Agrarian Transition

Karen MacoursUniversity of California, Berkeley, and Katholieke Universiteit LeuvenJohan F. M. SwinnenEuropean Commission and Katholieke Universiteit LeuvenI. IntroductionEconomic reforms have induced important output and productivity changesin the agricultural sectors of transition countries (TCs). There are, however,large differences between the countries in terms of the direction and themagnitude of these changes. For example, agricultural output increased con-siderably in the East Asian TCs, while there was a large output fall in theCentral and East European countries (CEECs) and the former Soviet Union(FSU) during transition (fig. 1).

Agricultural liberalization policy and commodity price volatility: a GARCH application

This study examines the effect of the recent radical agricultural liberalization policy, i.e. the 1996 FAIR Act, on agricultural commodity price volatility using Generalized Autoregressive Conditional Heteroscedasticity (GARCH) models. Results of the study indicate that the agricultural liberalization policy has caused an increase in the price volatility for three major grain commodities (corn, soybeans and wheat) and little change for oats, but a decrease for cotton. These findings stand in sharp contrast to Crain and Lee's observations in 1996 based on wheat markets that market-oriented measures in government farm policies tend to reduce agricultural price volatility.

Large‐ and Middle‐scale Farmers in the Groundnut Sector in Senegal in the Context of Liberalization and Structural Adjustment

The article presents preliminary ?ndings of a research survey on large‐and middle‐scale farmers and the groundnut sector in Senegal. The sampling of this group of producers is justi?ed on the basis of the high degree of social strati?cation and farmers’ heterogeneity existing in Senegal, and the methodological problems associated with approaches focused on the ‘ average representative farmer’. This argument leads to a task of grouping farmers into distinct classes according to capitalist tendencies, dynamism and scale of production. The core part of the article tackles the political economy of the process of agricultural liberalization and structural adjustment in Senegal and their effects on the behaviour and production conditions of the classes of large‐and middle‐scale farmers analysed in the ?rst part.

Liberalization of Peru's formal seed sector

During the 1990s, the Government of Peru began to aggressivelyprivatize agriculture. The government stopped loaning money to farmers' cooperatives and closed the government rice-buying company. The government even rented out most of its researchstations and many senior scientists lost their jobs. As part of this trend, the government eliminated its seed certification agency. Instead, private seed certification committees were set up with USAID funding and technical advise from a US university. The committees were supposed to become self-financing (bycertifying seed grown by small seed producers) and each committee was supposed to encourage the development of a group of small seed-producing firms, clustered around the seedcertification agency. The amazing thing is that many of the seed committees actually accomplished these goals. The agronomists who staffed the committees stood by their jobs,even after US funding ended, even though the committees' income was (at best) modest, and occasionally under the threat of violence from the extreme left. Some seed certificationcommittees failed and others did not. Some of the problems with Peruvian agricultural liberalization can be seen in regard to the seed programs of maize, rice, potatoes, and beans. For example, the government abandoned most research, yet could not resist creating certain distortions in the seed market (e.g.,buying large amounts of seed and distributing them for political ends).

Globalization of agriculture and European integration: A deepening effect of the Uruguay round

Taking the effect of the agricultural liberalization promoted by the Uruguay Round of GATT negotiations on European integration as an example, this paper discusses whether the globalization process promotes or undermines regional integration. This paper suggests that the UR had a positive effect on further European integration. It did so by triggering the reform of EC's common agricultural policy, which had been the source of repeated budgetary crises of the EC. Consequently, the UR made money available for a more integrative project, i.e., redistributional policy in the form of structural funds. The assumption of redistributional function by the EC means that the EC expanded its supranational policy competency into an area that in the past belonged exclusively to state prerogatives. Therefore, as the UR was in part responsible for the CAP reform, it can be said that the UR contributed to the deepening of European integration. This is a case where globalism moves regionalism forward.

Responsiveness, Flexibility, and Market Liberalization in China's Agriculture

been at most only limited gains from market liberalization. If one were to take the findings of this admittedly scant literature seriously, it would appear as if there is at most only a relatively small impact from market reforms in China. We believe there are three possible, but only one plausible, explanations for the findings. First, if market liberalization actually contributes little to no growth or increases in output or incomes, this would, of course, in part explain why economies that lead reform with market liberalization do not experience significant gains. Theory and the experiences of other economies in other settings, however, would argue against such an interpretation. Second, it could be that China's agricultural market liberalization has just proceeded so slowly that it is still too early for output to have been positively affected by market liberalization. However, as seen above, the record on the market expansion and the observations of many researchers would not support this view.

Women, Trade Liberalization and Food Security

Josefa Francisco argues that we need to look at the impact of globalization on national food security. First by understanding how export-oriented agriculture and trade liberalization are contributing to aggregate growth, and how these provide adequate incomes so that the poor can acquire basic necessities. And second by evaluating in a more serious way how the global trade market is impacting on social reproduction and women's work.

A Global Interpretation of the Rise of the East Asian Food Import Complex

The last quarter century explosion of consumer affluence in Japan, South Korea, Taiwan, and China, accompanied a new phase in the organization of the global food economy. It also conditioned the increasingly speculative capital investments in the region. This paper argues that the restructuring of production and consumption relations involved a movement away from the US-centered bilateral food surplus regime, and toward a multilateral food regime based in WTO-led agricultural liberalization, and the corporate restructuring of agriculture. The East Asian food import complex advances the neoliberal project of global free trade, spawning agro-export zones throughout Southeast Asia.

The Politics of Liberalizing Zambia’s Maize Markets

This paper discusses the process of agricultural liberalization in Zambia. The central argument is that maize markets have been more quickly and fully liberalized than maize input markets because the perceived political risks of liberalizing input markets are greater than those of liberalizing maize markets, and because economic interest groups benefited from maize liberalization while similar interests benefited from continued government interventions in input markets. These finding imply that in order to understand the prospects for economic liberalization in new democracies we must disaggregate both civil society and markets.

Book review. Agriculture and World Trade Liberalisation: Socio-Environmental Perspectives on the Common Agricultural Policy. MR Redclift, JN Lekakis, GP Zanias (eds)

Book review. Agriculture and World Trade Liberalisation: Socio-Environmental Perspectives on the Common Agricultural Policy. MR Redclift, JN Lekakis, GP Zanias (eds)

A Computable General Equilibrium Analysis of Agricultural Liberalisation: The Uruguay Round and Common Agricultural Policy Reform

This paper uses a computable general equilibrium model to assess the effects of the Uruguay Round (UR) and CAP reform. Detailed attention is given to the impact of the agricultural components of the UR and of the CAP reform on the agricultural and food‐processing sectors of the EU. The CGE model used, while based on the standard Global Trade Analysis Project (GTAP) model, uses a more detailed representation of the UR and CAP policy changes than is usual in GTAP analyses of the UR effects. In so doing it assumes a degree of specificity of factors used in agriculture and makes appropriate agricultural policy variables endogenous. Finally, it assesses the consequences of assuming imperfect competition in all non‐agricultural sectors.

Agricultural liberalization and the environment in Southern Europe: the role of the supply side

The argument advanced by free market optimists that liberalized agricultural policies will lead to conservation, through reductions in outputs and environmentally damaging inputs, leaves many more things to be decided. Critics have pointed out that lower prices may induce farmers either to abandon land with loss of biodiversity and rural landscape ecology as a result, to increase production and pollution in order to sustain current revenues, or to switch to more environmentally damaging crops. This article follows a different route. It proposes that overall reductions in the total volume of agricultural output or the total amount of agro-chemicals used does not guarantee environmental enhancement. Environmental problems are usually location specific and crop specific. The cultivation of industrial crops is responsible for serious ecosystem offences in areas around the World. Thus, to actually have some measure of which way a lower price regime would be going in terms of conservation, we need to study the effects of either technology shifts or production shifts. Looking at cotton, maize and sugar beet supply response in two Southern EU countries, under given production technologies, it concludes that price reductions will lead to minimal if any reductions in the supply of these crops. Thus, conservation efforts will need to assume explicit forms.

Aggregate supply response in Tanzanian agriculture

Tanzania is among the many African countries that have engaged in agricultural liberalization since the mid-1980s. in the hope that reforms that introduce price incentives and efficient marketing will encourage producers to respond. This paper assesses that claim by examining the supply response of agricultural output in Tanzania. Our estimates suggest that aggregate agricultural supply response is quite high so that the potential for agricultural sector response to liberalization of agricultural prices and marketing may be quite significant. The long-run elasticity of aggregate food crop output to relative prices was almost unity. Short-run supply responses were estimated at about 0.35 for aggregate food crops and for all (food and export) crops. Liberalization of agricultural markets, where it increases the effective prices paid to farmers, can be effective in promoting production, although complementary interventions, to improve infrastructure, marketing, access to inputs and credit, improved production technology etc, are probably necessary.