Are The Poverty Effects of Trade Policies Invisible?

Beginning with the WTO's Doha Development Agenda and establishment of the Millennium Development Goal of reducing poverty by 50 percent by 2015, poverty impacts of trade reforms have become central to the global development agenda. This has been particularly true of agricultural trade reforms d...

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Main Authors:	Verma, Monika, Hertel, Thomas W., Valenzuela, Ernesto
Format:	Journal Article
Language:	en_US
Published:	World Bank 2013
Subjects:	agricultural prices commodity price commodity prices consumer price consumer prices cost of living domestic markets expenditure factor prices international trade market condition market price market volatility price changes price fluctuations price variation price variations price volatility volatility world market
Online Access:	http://hdl.handle.net/10986/13462

id	okr-10986-13462
recordtype	oai_dc
spelling	okr-10986-134622021-04-23T14:03:08Z Are The Poverty Effects of Trade Policies Invisible? Verma, Monika Hertel, Thomas W. Valenzuela, Ernesto agricultural prices commodity price commodity prices consumer price consumer prices cost of living domestic markets expenditure factor prices international trade market condition market price market volatility price changes price fluctuations price variation price variations price volatility volatility world market Beginning with the WTO's Doha Development Agenda and establishment of the Millennium Development Goal of reducing poverty by 50 percent by 2015, poverty impacts of trade reforms have become central to the global development agenda. This has been particularly true of agricultural trade reforms due to the importance of grains in the diets of the poor, presence of relatively higher protection in agriculture, as well as heavy concentration of global poverty in rural areas where agriculture is the main source of income. Yet some in this debate have argued that, given the extreme volatility in agricultural commodity markets, the additional price and therefore poverty impacts due to trade liberalization might well be indiscernible. This paper formally tests the “invisibility hypothesis” using the method of stochastic simulation in a trade-poverty modeling framework. The hypothesis test is based on the comparison of two samples of price and poverty distributions. The first originates solely from the inherent variability in global staple grains markets, while the second combines the effects of inherent market variability with those of trade reform in these same markets. Results, at the national and stratum level indicate that the short-run poverty impacts of full trade liberalization in staple grains trade worldwide, are distinguishable in only four of the fifteen countries, suggesting that impacts of more modest agricultural trade reforms are indeed likely to be invisible in short run. Countries that show statistically significant short run impacts are the ones characterized by high staple grains tariffs and/or a moderate degree of grain markets variability. Within each country, results are heterogeneous. In two thirds of the sample countries, agriculturally self-employed poor experience statistically significant poverty impacts from trade liberalization. However, this figure is under a third for all the other strata. 2013-05-20T20:05:39Z 2013-05-20T20:05:39Z 2011-05-31 Journal Article World Bank Economic Review 1564-698X doi:10.1093/wber/lhr014 http://hdl.handle.net/10986/13462 en_US World Bank Economic Review;25(2) CC BY-NC-ND 3.0 IGO http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank World Bank Journal Article Bangladesh Brazil Chile Colombia Indonesia Malawi Mexico Mozambique Peru Philippines Thailand Uganda Venezuela, Republica Bolivariana de Vietnam Zambia
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	en_US
topic	agricultural prices commodity price commodity prices consumer price consumer prices cost of living domestic markets expenditure factor prices international trade market condition market price market volatility price changes price fluctuations price variation price variations price volatility volatility world market
spellingShingle	agricultural prices commodity price commodity prices consumer price consumer prices cost of living domestic markets expenditure factor prices international trade market condition market price market volatility price changes price fluctuations price variation price variations price volatility volatility world market Verma, Monika Hertel, Thomas W. Valenzuela, Ernesto Are The Poverty Effects of Trade Policies Invisible?
geographic_facet	Bangladesh Brazil Chile Colombia Indonesia Malawi Mexico Mozambique Peru Philippines Thailand Uganda Venezuela, Republica Bolivariana de Vietnam Zambia
relation	World Bank Economic Review;25(2)
description	Beginning with the WTO's Doha Development Agenda and establishment of the Millennium Development Goal of reducing poverty by 50 percent by 2015, poverty impacts of trade reforms have become central to the global development agenda. This has been particularly true of agricultural trade reforms due to the importance of grains in the diets of the poor, presence of relatively higher protection in agriculture, as well as heavy concentration of global poverty in rural areas where agriculture is the main source of income. Yet some in this debate have argued that, given the extreme volatility in agricultural commodity markets, the additional price and therefore poverty impacts due to trade liberalization might well be indiscernible. This paper formally tests the “invisibility hypothesis” using the method of stochastic simulation in a trade-poverty modeling framework. The hypothesis test is based on the comparison of two samples of price and poverty distributions. The first originates solely from the inherent variability in global staple grains markets, while the second combines the effects of inherent market variability with those of trade reform in these same markets. Results, at the national and stratum level indicate that the short-run poverty impacts of full trade liberalization in staple grains trade worldwide, are distinguishable in only four of the fifteen countries, suggesting that impacts of more modest agricultural trade reforms are indeed likely to be invisible in short run. Countries that show statistically significant short run impacts are the ones characterized by high staple grains tariffs and/or a moderate degree of grain markets variability. Within each country, results are heterogeneous. In two thirds of the sample countries, agriculturally self-employed poor experience statistically significant poverty impacts from trade liberalization. However, this figure is under a third for all the other strata.
format	Journal Article
author	Verma, Monika Hertel, Thomas W. Valenzuela, Ernesto
author_facet	Verma, Monika Hertel, Thomas W. Valenzuela, Ernesto
author_sort	Verma, Monika
title	Are The Poverty Effects of Trade Policies Invisible?
title_short	Are The Poverty Effects of Trade Policies Invisible?
title_full	Are The Poverty Effects of Trade Policies Invisible?
title_fullStr	Are The Poverty Effects of Trade Policies Invisible?
title_full_unstemmed	Are The Poverty Effects of Trade Policies Invisible?
title_sort	are the poverty effects of trade policies invisible?
publisher	World Bank
publishDate	2013
url	http://hdl.handle.net/10986/13462
_version_	1764423558806634496

Are The Poverty Effects of Trade Policies Invisible?

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