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Free Trade in Agriculture and Global Poverty

Authors


  • The authors are grateful to Kym Anderson, Hans Timmer, Ernesto Valenzuela, Dominique van der Mensbrugghe, participants of the 2007 ‘Agricultural Price Distortions, Inequality and Poverty’ conference at the World Bank, 2007 LACEA conference at the Universidad de los Andes, and 2008 GTAP conference in Helsinki for helpful comments and suggestions. All remaining errors are ours.

  • The findings, interpretations and conclusions expressed in this paper are entirely those of the authors. They do not necessarily reflect the view of the World Bank, its executive directors, or the countries they represent.

Abstract

This paper assesses the potential impacts of the removal of agriculture trade distortions using a newly developed data set and methodological approach for evaluating the global poverty and inequality effects of policy reforms. It finds that liberalisation of agriculture and food could increase global extreme poverty by 0.2 per cent and lower moderate poverty by 0.3 per cent. Beneath these small aggregate changes, most countries witness a substantial reduction in poverty, while South Asia – where half of the world’s poor reside – experiences an increase in extreme poverty incidence owing to high rates of protection afforded to unskilled-intensive agricultural sectors. The distributional changes are likely to be mild but exhibit a strong regional pattern. Inequality is likely to fall in regions such as Latin America, which are characterised by high initial inequality, and rise in regions like South Asia, characterised by low initial inequality.

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