Working Paper: NBER ID: w9668
Authors: Christopher L. Gilbert; Panos Varangis
Abstract: Liberalization of tropical agricultural markets has brought globalization, in the sense that all producers now face world rather than domestic prices. Producer prices have tended to rise as a share of fob prices as intermediation costs and tax has declined. However, in conjunction with inelastic demand, the downward shift of the aggregate supply curve results in lower world prices. Farmers therefore get a higher share of a lower price. Cocoa is the market where these changes have been most pronounced. The incidence of the liberalization benefits in cocoa is largely on developed country consumers at the expense of the governments of the exporting countries and farmers in non-liberalizing (non-African) countries. Farmers in liberalized African markets are broadly neither better nor worse off.
Keywords: No keywords provided
JEL Codes: Q17; F14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| liberalization (F69) | higher share of FOB prices (F23) |
| higher share of FOB prices (F23) | higher share of lower price (D41) |
| liberalization (F69) | welfare of consumers in developed economies (D18) |
| liberalization (F69) | downward pressure on world prices (F16) |
| downward pressure on world prices (F16) | overall welfare effects in liberalizing countries (F69) |