Agricultural Price Distortions, Inequality, and Poverty

Reforms in recent decades have sharply reduced the distortions affecting agriculture in developing countries, particularly by cuts to agricultural export taxes and by some reductions in government assistance to agriculture in high-income countries, but international trade in farm products continues to be far more distorted than trade in nonfarm goods. This paper summarizes a series of empirical studies that focus on the effects of the remaining distortions to world merchandise trade for poverty and inequality, especially in developing countries. To obtain different insights into the various impacts, two global studies are undertaken using the World Bank's Linkage model, one multi-country study uses the Global Trade Analysis Project (GTAP) model, and ten country case studies are also included, each using a national economy-wide model. The Linkage model results suggest that liberalization will reduce international inequality, largely by boosting farm incomes and raising real wages for unskilled workers in developing countries, and will reduce the number of poor people worldwide by 3 percent. The analysis based on the GTAP model for a sample of 15 countries, and the ten stand-alone national case studies, all point to larger reductions in poverty, especially if only the non-poor are subjected to increased income taxation to compensate for the loss of trade tax revenue.

Bibliographic Details

Main Authors:	Cockburn, John, Anderson, Kym, Martin, Will
Format:	Working Paper biblioteca
Language:	English en_US
Published:	World Bank, Washington, DC 2009-08
Subjects:	ADVERSE EFFECT, AGRICULTURAL DEVELOPMENT, AGRICULTURAL INCOMES, AGRICULTURAL LAND, AGRICULTURAL LIBERALIZATION, AGRICULTURAL POLICY, AGRICULTURAL PRICES, AGRICULTURAL PRODUCTS, AGRICULTURAL SECTOR, AGRICULTURAL SECTORS, AGRICULTURAL TRADE, AGRICULTURE, BENCHMARK, BENCHMARK DATA, BENEFITS OF TRADE, CAPITAL OWNERS, COMMODITIES, COMMODITY, COMMUNICATION TECHNOLOGY, CONSTANT RETURNS TO SCALE, CONSUMER DEMAND, CONSUMER PRICES, CONSUMERS, COST OF CAPITAL, CUSTOMS, CUSTOMS REVENUE, DEBT, DEMAND CURVE, DEVELOPED COUNTRIES, DEVELOPING COUNTRIES, DEVELOPING COUNTRY, DEVELOPMENT ECONOMICS, DEVELOPMENT POLICY, DISTRIBUTION OF INCOME, DISTRIBUTIONAL EFFECTS, DIVIDEND, DOMESTIC PRICE, DOMESTIC PRICES, ECONOMETRIC ANALYSIS, ECONOMETRICS, ECONOMIC GROWTH, ECONOMIC IMPLICATIONS, ECONOMIC SIZE, ECONOMIES OF SCALE, ELASTICITY, ELASTICITY OF SUBSTITUTION, EMERGING ECONOMIES, EXCHANGE RATE, EXCHANGE RATE REGIMES, EXPORT DEMAND, EXPORT PRICES, EXPORT TAX, EXPORT TAXES, EXPORTS, EXTERNAL TRADE, EXTREME POVERTY, EXTREME POVERTY LINE, EXTREMELY POOR PEOPLE, FACTORS OF PRODUCTION, FARM HOUSEHOLDS, FARM INCOME, FARM INCOMES, FARM LABOR, FARM PRODUCTS, FARM WORK, FARM WORKERS, FARMER, FARMERS, FINANCIAL CRISIS, FOOD MARKETS, FOOD PRICES, FOREIGN CURRENCY, FOREIGN DEBT, FREE ACCESS, FREE TRADE, GDP, GDP PER CAPITA, GENERAL EQUILIBRIUM, GINI COEFFICIENT, GLOBAL ECONOMIC PROSPECTS, GLOBAL ECONOMY, GLOBAL MARKETS, GLOBAL POVERTY, GLOBAL TRADE, GLOBALIZATION, GOVERNMENT BUDGETS, HOUSEHOLD CONSUMPTION, HOUSEHOLD HEAD, HOUSEHOLD INCOME, HOUSEHOLD INCOMES, HOUSEHOLD SURVEY, HOUSEHOLD SURVEYS, HOUSEHOLD WELFARE, IMPERFECT COMPETITION, IMPORT BARRIERS, IMPORT COMPETITION, IMPORT RESTRICTIONS, IMPORTS, INCIDENCE OF POVERTY, INCOME, INCOME DISTRIBUTION, INCOME DYNAMICS, INCOME GAP, INCOME INEQUALITY, INCOME SHOCKS, INCOME TAX, INCOME TAXES, INCOME-GENERATING ACTIVITIES, INEQUALITY, INFRASTRUCTURE INVESTMENTS, INTERNATIONAL CAPITAL, INTERNATIONAL CAPITAL FLOWS, INTERNATIONAL ECONOMICS, INTERNATIONAL TRADE, IRRIGATION, LABOR MARKET, LIVESTOCK ACTIVITIES, LOW-INCOME COUNTRIES, MACROECONOMIC POLICIES, MARKET ACCESS, MONOPOLISTIC COMPETITION, MULTILATERAL AGREEMENTS, MULTILATERAL TRADE, MULTILATERAL TRADE AGREEMENTS, MULTILATERAL TRADE NEGOTIATIONS, MULTILATERAL TRADE REFORM, NATIONAL ECONOMIES, NATIONAL ECONOMY, NATIONAL MODELS, NATIONAL POVERTY, NATIONAL POVERTY HEADCOUNT, NATIONAL POVERTY LINE, NONFARM INCOME, OPEN ECONOMY, PARTIAL EQUILIBRIUM ANALYSIS, PARTICULAR COUNTRIES, PARTICULAR COUNTRY, POLITICAL ECONOMY, POLITICAL ECONOMY ANALYSIS, POOR, POOR FARM HOUSEHOLDS, POOR HOUSEHOLDS, POOR PEOPLE, POVERTY ALLEVIATION, POVERTY DATA, POVERTY HEADCOUNT INDEX, POVERTY IMPACT, POVERTY INCIDENCE, POVERTY LEVEL, POVERTY LINES, POVERTY RATE, POVERTY REDUCING, POVERTY REDUCTION, POWER PARITY, PRICE DISTORTION, PRICE DISTORTIONS, PRICE INCREASES, PRICE SUBSIDIES, PRODUCT MARKETS, PRODUCTIVITY GROWTH, PROTECTIONIST, PURCHASING POWER, RAPID GROWTH, REAL GDP, REDUCTION IN POVERTY, REGIONAL AVERAGE, REGIONAL AVERAGES, REGIONAL LEVELS, RURAL, RURAL AREAS, RURAL BASE, RURAL HOUSEHOLDS, RURAL HUMAN CAPITAL, RURAL INCOME, RURAL INEQUALITY, RURAL POOR, RURAL POVERTY, SHOPS, SKILLED WORKERS, SOCIAL PROGRAMS, SOCIAL SAFETY NETS, TARIFF PROTECTION, TARIFF REVENUE, TAX REVENUE, TAX REVENUES, TAXATION, TECHNOLOGY TRANSFER, TERMS OF TRADE, TOTAL POVERTY, TRADE BARRIERS, TRADE DATA, TRADE DISTORTIONS, TRADE IN SERVICES, TRADE LIBERALIZATION, TRADE NEGOTIATIONS, TRADE POLICIES, TRADE POLICY, TRADE POLICY REFORM, TRADE POLICY REFORMS, TRADE REFORMS, TRADE TAX, TRADE TAXES, TRADE-DISTORTING POLICIES, TRANSITION ECONOMIES, UNEMPLOYMENT, UNSKILLED LABOR, URBANIZATION, VALUE ADDED, VOLATILITY, WAGE RATES, WAGES, WEALTH, WORLD TRADE, WORLD TRADE ORGANIZATION, WTO,
Online Access:	http://documents.worldbank.org/curated/en/236331468169754921/Agricultural-price-distortions-inequality-and-poverty-introduction-and-summary https://hdl.handle.net/10986/28148
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