Focus - Agricultural price policy: revisiting Krueger, Schiff, and Valdés

Abstract

Two alternative interpretations of history have very different implications for future agricultural trade reform. Two decades ago a major World Bank study of distortions to agricultural incentives in 18 developing countries was published by Anne O. Krueger, Maurice Schiff, and Alberto Valdés (The Political Economy of Agricultural Pricing Policy, 3 vols., Baltimore: Johns Hopkins University Press, 1991). That K/S/V study, which covered 1960–84, found that policies in most of those developing countries were harming their farmers—either directly, through such things as taxes on agricultural exports, or indirectly, through manufacturing protection and exchange rate overvaluation.