Effects of gradual food policy reforms in the 1990s

Abstract

A multi-commodity model of world food markets is used to show the likely effects of a gradual lowering of tariffiad agricultural protection rates by industrial countries during the 1990s. In addition to raising the mean and lowering the variance of international food prices, such reforms bestow large economic benefits on both reforming and traditional food-exporting countries. And, contrary to the fears of many in protective countries, there is no massive shrinkage of the reforming rural sectors. Instead, the disincentive effect of reform on food production simply slows the output expansion resulting from normal productivity growth.