Agricultural Tariffs or Subsidies : Which Are More Important for Developing Economies?

Agricultural Tariffs or Subsidies : Which Are More Important for Developing Economies?

This article assesses the impact of the world price-depressing effect of agricultural subsidies and border protection in Organization for Economic Co-operation and Development (OECD) countries on developing economies' exports, imports, and wel...

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Bibliographic Details
Main Authors:	Hoekman, Bernard, Ng, Francis, Olarreaga, Olarreaga
Format:	Journal Article
Language:	English en_US
Published:	Washington, DC: World Bank 2014
Subjects:	AGRICULTURAL COMMODITIES AGRICULTURAL MARKETS AGRICULTURAL PRODUCTION AGRICULTURAL PRODUCTS AGRICULTURAL SUBSIDIES AGRICULTURAL SUPPORT AGRICULTURAL SUPPORT POLICIES AGRICULTURAL TRADE AGRICULTURAL TRADE LIBERALIZATION AGRICULTURE APPLIED TARIFF ARBITRAGE AVERAGE EXCHANGE RATE AVERAGE TARIFF AVERAGE TARIFFS BENCHMARK BORDER PROTECTION BUDGET CONSTRAINTS COEFFICIENT ESTIMATE CONSUMER SURPLUS CONSUMERS CORRELATION COEFFICIENT COUNTRY DUMMY COUNTRY DUMMY VARIABLES CURRENCY DATA CUSTOMS CUSTOMS REVENUE DEMAND ELASTICITIES DEMAND ELASTICITY DEPRESSING EFFECT DEVELOPED COUNTRIES DEVELOPING COUNTRIES DISTORTIONS DOMESTIC CONSUMPTION DOMESTIC DEMAND DOMESTIC PRODUCTION DOMESTIC SUPPORT POLICIES ECONOMETRIC ANALYSIS ECONOMIC POLICY ELASTICITY ELASTICITY OF EXPORT EQUILIBRIUM EXCHANGE RATE EXCHANGE RATE OVERVALUATION EXOGENOUS SHOCK EXPORT REVENUE EXPORT SUBSIDIES EXPORT SUBSIDY EXPORT SUBSIDY COMMITMENTS EXPORT SUPPLY EXPORTERS EXPORTS FACTOR MARKETS FIXED COSTS FOOD INDUSTRY FREE ACCESS GDP GENERAL EQUILIBRIUM GENERAL EQUILIBRIUM MODELS GLOBAL TRADE GLOBAL TRADE ANALYSIS HIGH TARIFFS HIGH-INCOME COUNTRIES IMPACT ON PRICE IMPORT IMPORT COMPETITION IMPORT DEMAND IMPORT PRICES IMPORTS INCOME INDUSTRIAL POLICY INTERNATIONAL ECONOMICS INTERNATIONAL FINANCIAL STATISTICS INTERNATIONAL MARKET INTERNATIONAL TRADE INTERNATIONAL TRANSPORT LDCS MARKET ACCESS MARKET STRUCTURE MOST FAVORED NATION NATIONAL CURRENCY NATIONAL INTERESTS NET EXPORTERS OVERVALUATION PER CAPITA INCOME PREFERENTIAL ACCESS PREFERENTIAL TRADE PREFERENTIAL TRADE ARRANGEMENTS PRICE ELASTICITIES PRICE ELASTICITY PRICE INCREASES PRICE SUPPORT PRICE SUPPORTS PRODUCT MARKETS PROTECTION DATA PROTECTION MEASURES QUOTA TARIFFS QUOTAS REDUCTION IN TARIFFS RENTS RULES OF ORIGIN SPECIALIZATION SPECIFIC COMMITMENTS SUBSIDY POLICIES SUPPLY RESPONSE SUPPLY SIDE TARIFF CLASSIFICATION TARIFF EQUIVALENT TARIFF LINES TARIFF PROTECTION TARIFF RATE TARIFF RATE QUOTAS TARIFF REDUCTION TARIFF REDUCTIONS TARIFF REVENUE TAXATION TERMS OF TRADE TOTAL EXPORTS TRADE BARRIERS TRADE DATA TRADE LIBERALIZATION TRADE LOSSES TRADE NEGOTIATIONS TRADE POLICY TRADE POLICY REFORMS TRADE PREFERENCES TRADE REFORMS TRADE RESTRICTIVENESS TRADE SHARES TRADING PARTNERS TRANSPORT COSTS UNILATERAL LIBERALIZATION URUGUAY ROUND WEIGHTS WELFARE GAINS WELFARE IMPACTS WELFARE LOSS WELFARE LOSSES WORLD DEVELOPMENT INDICATORS WORLD ECONOMY WORLD MARKET WORLD MARKETS WORLD PRICE WORLD PRICES WORLD TRADE WORLD TRADE ORGANIZATION WORLD TRADING SYSTEM WTO
Online Access:	http://documents.worldbank.org/curated/en/2004/05/17742559/agricultural-tariffs-or-subsidies-more-important-developing-economies http://hdl.handle.net/10986/17158

Description
Summary:	This article assesses the impact of the world price-depressing effect of agricultural subsidies and border protection in Organization for Economic Co-operation and Development (OECD) countries on developing economies' exports, imports, and welfare. Developing economy exporters are likely to benefit from reductions in such subsidies and trade barriers, whereas net importers may lose as world prices rise. A simple partial equilibrium model of global trade in commodities that benefit from domestic support or export subsidies is developed to estimate the relevant elasticities. Simulation results suggest that a 50 percent reduction in border protection will have a much larger positive impact on developing economies' exports and welfare than a 50 percent reduction in agricultural subsidies. Although there is significant heterogeneity across developing economies, the results suggest that efforts in the Doha round of World Trade Organization (WTO) negotiations should be directed at substantially reducing border protection.

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