Why Governments Should Stop Non-Social Subsidies : Measuring Their Consequences for Rural Latin America

The provision of public goods and the amelioration of market failure are the classical justifications for government intervention in the economy. In reality, (1) governments intervene in markets that are not affected by failure, and (2) a large share of the government resources is spent in private g...

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Main Author:	López, Ramón
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	AGRICULTURE BENCHMARK CAPITAL GOODS CAPITAL MARKETS COMMODITIES CONCEPTUAL FRAMEWORK CONSTANT RETURNS TO SCALE CORRUPTION CROWDING CROWDING OUT DEBT DECISION MAKING DEFORESTATION DEVELOPED COUNTRIES ECONOMIC DEVELOPMENT ECONOMIC EFFECTS ECONOMIC EFFICIENCY ECONOMIC EXPANSION ECONOMIC GROWTH ECONOMIC PERFORMANCE ECONOMIC POWER ECONOMICS ECONOMICS LITERATURE ECONOMISTS EFFICIENT MARKETS EMPIRICAL ANALYSIS EMPIRICAL EVIDENCE EMPIRICAL STUDIES EMPLOYMENT ENVIRONMENTAL PROTECTION EVASION EXOGENOUS VARIABLES EXPECTED VALUE EXPORTS FINANCIAL RESOURCES GDP GDP PER CAPITA GOVERNMENT DEBT GOVERNMENT EXPENDITURES GOVERNMENT SUBSIDIES HEALTH CARE HUMAN CAPITAL IMPORTS INCOME INCOME DISTRIBUTION INCOME TAXES INPUT PRICES LABOR FORCE LIQUIDITY MARKET FAILURES MARKET IMPERFECTIONS MARKET PRICES MONEY NATURAL RESOURCES OIL PER CAPITA INCOME POLICY RESEARCH POLITICIANS POSITIVE EXTERNALITIES PRICE CHANGES PRIVATE GOODS PRIVATE SECTOR PRODUCERS PRODUCTION FUNCTION PRODUCTIVITY PRODUCTIVITY GROWTH PROPERTY TAXES PUBLIC DEBT PUBLIC EXPENDITURE PUBLIC EXPENDITURES PUBLIC GOOD PUBLIC GOOD/PRIVATE PUBLIC GOODS PUBLIC INFRASTRUCTURE PUBLIC POLICIES PUBLIC RESOURCES PUBLIC SECTOR PUBLIC/PRIVATE GOODS REAL WAGES ROADS RURAL INFRASTRUCTURE SANITATION SOCIAL SERVICES STRUCTURE OF GOVERNMENT SUPPLY TAX TAXATION TRADE POLICIES TRADEOFFS VALUE ADDED WEALTH
Online Access:	http://documents.worldbank.org/curated/en/2005/05/5796546/governments-stop-non-social-subsidies-measuring-consequences-rural-latin-america http://hdl.handle.net/10986/8917

id	okr-10986-8917
recordtype	oai_dc
spelling	okr-10986-89172021-04-23T14:02:42Z Why Governments Should Stop Non-Social Subsidies : Measuring Their Consequences for Rural Latin America López, Ramón AGRICULTURE BENCHMARK CAPITAL GOODS CAPITAL MARKETS COMMODITIES CONCEPTUAL FRAMEWORK CONSTANT RETURNS TO SCALE CORRUPTION CROWDING CROWDING OUT DEBT DECISION MAKING DEFORESTATION DEVELOPED COUNTRIES ECONOMIC DEVELOPMENT ECONOMIC EFFECTS ECONOMIC EFFICIENCY ECONOMIC EXPANSION ECONOMIC GROWTH ECONOMIC PERFORMANCE ECONOMIC POWER ECONOMICS ECONOMICS LITERATURE ECONOMISTS EFFICIENT MARKETS EMPIRICAL ANALYSIS EMPIRICAL EVIDENCE EMPIRICAL STUDIES EMPLOYMENT ENVIRONMENTAL PROTECTION EVASION EXOGENOUS VARIABLES EXPECTED VALUE EXPORTS FINANCIAL RESOURCES GDP GDP PER CAPITA GOVERNMENT DEBT GOVERNMENT EXPENDITURES GOVERNMENT SUBSIDIES HEALTH CARE HUMAN CAPITAL IMPORTS INCOME INCOME DISTRIBUTION INCOME TAXES INPUT PRICES LABOR FORCE LIQUIDITY MARKET FAILURES MARKET IMPERFECTIONS MARKET PRICES MONEY NATURAL RESOURCES OIL PER CAPITA INCOME POLICY RESEARCH POLITICIANS POSITIVE EXTERNALITIES PRICE CHANGES PRIVATE GOODS PRIVATE SECTOR PRODUCERS PRODUCTION FUNCTION PRODUCTIVITY PRODUCTIVITY GROWTH PROPERTY TAXES PUBLIC DEBT PUBLIC EXPENDITURE PUBLIC EXPENDITURES PUBLIC GOOD PUBLIC GOOD/PRIVATE PUBLIC GOODS PUBLIC INFRASTRUCTURE PUBLIC POLICIES PUBLIC RESOURCES PUBLIC SECTOR PUBLIC/PRIVATE GOODS REAL WAGES ROADS RURAL INFRASTRUCTURE SANITATION SOCIAL SERVICES STRUCTURE OF GOVERNMENT SUPPLY TAX TAXATION TRADE POLICIES TRADEOFFS VALUE ADDED WEALTH The provision of public goods and the amelioration of market failure are the classical justifications for government intervention in the economy. In reality, (1) governments intervene in markets that are not affected by failure, and (2) a large share of the government resources is spent in private goods, not in public goods. In contrast to issue 1, issue 2 has received little attention in the literature, in spite of the potentially large efficiency and equity losses arising from misguided allocations of public expenditures. López empirically documents the size of (2) in the rural sector and investigates its consequences for rural development for 10 Latin American countries over the 1985-2000 period. The econometric evidence suggests that the structure of public expenditures is an important factor of economic development in the rural sector, much greater than that of the level of public expenditures and of other factors on which the development literature has traditionally focused. Expanding total public expenditure in rural areas while maintaining the existing public expenditure composition prevailing in certain countries does little to promote agricultural income and reduce rural poverty. Spending a significant share of government resources in (non-social) subsidies causes less agriculture income, induces an excessive reliance of agriculture on land expansion, and reduces the income of the rural poor. 2012-06-25T14:54:44Z 2012-06-25T14:54:44Z 2005-05 http://documents.worldbank.org/curated/en/2005/05/5796546/governments-stop-non-social-subsidies-measuring-consequences-rural-latin-america http://hdl.handle.net/10986/8917 English Policy Research Working Paper; No. 3609 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research Latin America & Caribbean Latin America
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	AGRICULTURE BENCHMARK CAPITAL GOODS CAPITAL MARKETS COMMODITIES CONCEPTUAL FRAMEWORK CONSTANT RETURNS TO SCALE CORRUPTION CROWDING CROWDING OUT DEBT DECISION MAKING DEFORESTATION DEVELOPED COUNTRIES ECONOMIC DEVELOPMENT ECONOMIC EFFECTS ECONOMIC EFFICIENCY ECONOMIC EXPANSION ECONOMIC GROWTH ECONOMIC PERFORMANCE ECONOMIC POWER ECONOMICS ECONOMICS LITERATURE ECONOMISTS EFFICIENT MARKETS EMPIRICAL ANALYSIS EMPIRICAL EVIDENCE EMPIRICAL STUDIES EMPLOYMENT ENVIRONMENTAL PROTECTION EVASION EXOGENOUS VARIABLES EXPECTED VALUE EXPORTS FINANCIAL RESOURCES GDP GDP PER CAPITA GOVERNMENT DEBT GOVERNMENT EXPENDITURES GOVERNMENT SUBSIDIES HEALTH CARE HUMAN CAPITAL IMPORTS INCOME INCOME DISTRIBUTION INCOME TAXES INPUT PRICES LABOR FORCE LIQUIDITY MARKET FAILURES MARKET IMPERFECTIONS MARKET PRICES MONEY NATURAL RESOURCES OIL PER CAPITA INCOME POLICY RESEARCH POLITICIANS POSITIVE EXTERNALITIES PRICE CHANGES PRIVATE GOODS PRIVATE SECTOR PRODUCERS PRODUCTION FUNCTION PRODUCTIVITY PRODUCTIVITY GROWTH PROPERTY TAXES PUBLIC DEBT PUBLIC EXPENDITURE PUBLIC EXPENDITURES PUBLIC GOOD PUBLIC GOOD/PRIVATE PUBLIC GOODS PUBLIC INFRASTRUCTURE PUBLIC POLICIES PUBLIC RESOURCES PUBLIC SECTOR PUBLIC/PRIVATE GOODS REAL WAGES ROADS RURAL INFRASTRUCTURE SANITATION SOCIAL SERVICES STRUCTURE OF GOVERNMENT SUPPLY TAX TAXATION TRADE POLICIES TRADEOFFS VALUE ADDED WEALTH
spellingShingle	AGRICULTURE BENCHMARK CAPITAL GOODS CAPITAL MARKETS COMMODITIES CONCEPTUAL FRAMEWORK CONSTANT RETURNS TO SCALE CORRUPTION CROWDING CROWDING OUT DEBT DECISION MAKING DEFORESTATION DEVELOPED COUNTRIES ECONOMIC DEVELOPMENT ECONOMIC EFFECTS ECONOMIC EFFICIENCY ECONOMIC EXPANSION ECONOMIC GROWTH ECONOMIC PERFORMANCE ECONOMIC POWER ECONOMICS ECONOMICS LITERATURE ECONOMISTS EFFICIENT MARKETS EMPIRICAL ANALYSIS EMPIRICAL EVIDENCE EMPIRICAL STUDIES EMPLOYMENT ENVIRONMENTAL PROTECTION EVASION EXOGENOUS VARIABLES EXPECTED VALUE EXPORTS FINANCIAL RESOURCES GDP GDP PER CAPITA GOVERNMENT DEBT GOVERNMENT EXPENDITURES GOVERNMENT SUBSIDIES HEALTH CARE HUMAN CAPITAL IMPORTS INCOME INCOME DISTRIBUTION INCOME TAXES INPUT PRICES LABOR FORCE LIQUIDITY MARKET FAILURES MARKET IMPERFECTIONS MARKET PRICES MONEY NATURAL RESOURCES OIL PER CAPITA INCOME POLICY RESEARCH POLITICIANS POSITIVE EXTERNALITIES PRICE CHANGES PRIVATE GOODS PRIVATE SECTOR PRODUCERS PRODUCTION FUNCTION PRODUCTIVITY PRODUCTIVITY GROWTH PROPERTY TAXES PUBLIC DEBT PUBLIC EXPENDITURE PUBLIC EXPENDITURES PUBLIC GOOD PUBLIC GOOD/PRIVATE PUBLIC GOODS PUBLIC INFRASTRUCTURE PUBLIC POLICIES PUBLIC RESOURCES PUBLIC SECTOR PUBLIC/PRIVATE GOODS REAL WAGES ROADS RURAL INFRASTRUCTURE SANITATION SOCIAL SERVICES STRUCTURE OF GOVERNMENT SUPPLY TAX TAXATION TRADE POLICIES TRADEOFFS VALUE ADDED WEALTH López, Ramón Why Governments Should Stop Non-Social Subsidies : Measuring Their Consequences for Rural Latin America
geographic_facet	Latin America & Caribbean Latin America
relation	Policy Research Working Paper; No. 3609
description	The provision of public goods and the amelioration of market failure are the classical justifications for government intervention in the economy. In reality, (1) governments intervene in markets that are not affected by failure, and (2) a large share of the government resources is spent in private goods, not in public goods. In contrast to issue 1, issue 2 has received little attention in the literature, in spite of the potentially large efficiency and equity losses arising from misguided allocations of public expenditures. López empirically documents the size of (2) in the rural sector and investigates its consequences for rural development for 10 Latin American countries over the 1985-2000 period. The econometric evidence suggests that the structure of public expenditures is an important factor of economic development in the rural sector, much greater than that of the level of public expenditures and of other factors on which the development literature has traditionally focused. Expanding total public expenditure in rural areas while maintaining the existing public expenditure composition prevailing in certain countries does little to promote agricultural income and reduce rural poverty. Spending a significant share of government resources in (non-social) subsidies causes less agriculture income, induces an excessive reliance of agriculture on land expansion, and reduces the income of the rural poor.
format	Publications & Research :: Policy Research Working Paper
author	López, Ramón
author_facet	López, Ramón
author_sort	López, Ramón
title	Why Governments Should Stop Non-Social Subsidies : Measuring Their Consequences for Rural Latin America
title_short	Why Governments Should Stop Non-Social Subsidies : Measuring Their Consequences for Rural Latin America
title_full	Why Governments Should Stop Non-Social Subsidies : Measuring Their Consequences for Rural Latin America
title_fullStr	Why Governments Should Stop Non-Social Subsidies : Measuring Their Consequences for Rural Latin America
title_full_unstemmed	Why Governments Should Stop Non-Social Subsidies : Measuring Their Consequences for Rural Latin America
title_sort	why governments should stop non-social subsidies : measuring their consequences for rural latin america
publisher	World Bank, Washington, DC
publishDate	2012
url	http://documents.worldbank.org/curated/en/2005/05/5796546/governments-stop-non-social-subsidies-measuring-consequences-rural-latin-america http://hdl.handle.net/10986/8917
_version_	1764407260147089408

Why Governments Should Stop Non-Social Subsidies : Measuring Their Consequences for Rural Latin America

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