Impact of global trade and subsidy policies on developing country trade

Abstract

The impacts of all merchandise trade distortions (including agricultural subsidies) globally are estimated using the latest versions of the GTAP database and the Linkage model of the global economy (projected to 2015). If all those trade-distorting measures were to be removed, the developing countries' share of global output as of 2015 would rise from 70 to 75 percent for primary agricultural goods, and from 62 to 65 percent for textiles and clothing. Developing countries' share of global exports would rise even more dramatically, especially in agriculture: from 47 to 62 percent in primary farm products and from 34 to 40 percent in processed farm products (an increase of two thirds or around $200 billion per year in 2001 US dollars). Exports of non-agricultural goods would rise by $400 billion per year. This amounts to more than six times what was needed to service the foreign debt of all developing countries in 2003, and to eight times their receipts of official development assistance. Cotton exports alone would rise by more than $4 billion for developing countries as a whole, almost half of which would be enjoyed by Sub-Saharan Africa.