Working Paper: CEPR ID: DP3576
Authors: Bernard Hoekman; Francis Ng; Marcelo Olarreaga
Abstract: High levels of protection and domestic support for farmers in developed countries significantly affect many least developed countries (LDCs), both directly and through the price-depressing effect of agricultural support policies. High tariffs and domestic support may also lower the world price of agricultural products, benefiting net importers. This Paper assesses the impact of reducing these distortionary policies for a sample of 119 countries. We find significant differences in the impact of a 50 percent cut in tariffs and a 50 cut in domestic support for LDCs as compared to non-LDC developing countries. However, for both groups of countries tariff reductions have a much greater positive effect on exports and welfare.
Keywords: agriculture; trade; developing countries; subsidies; tariffs; trade negotiations; WTO
JEL Codes: D58; F13; F14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Reducing agricultural tariffs (Q17) | Increased exports for developing countries (O19) |
| Reducing agricultural tariffs (Q17) | Increased welfare for developing countries (I38) |
| Cuts in domestic support (F18) | Increased exports for developing countries (O19) |
| Tariff reductions (F13) | Greater welfare gains compared to domestic support cuts (D69) |
| Tariff reductions (F13) | Enhanced market access and competitiveness (F15) |
| Tariff reductions (F13) | Increased export revenues (F10) |
| Tariff reductions (F13) | Greater trade outcomes for developing countries (F63) |