BRIEF

Distortions to Agricultural Incentives

Note to Users: This webpage is an archived version of an earlier, more extensive website. PDF and Excel files from the original site have been made available via Zip files at the bottom of this page. A reproduction of the web pages from the earlier website is available via PDF. The annual time series of estimates of the extent of agricultural price distortions in both advanced and developing economies is now updated every six months by The International Organisations Consortium for Measuring the Policy Environment for Agriculture, which includes the World Bank, and is freely accessible at www.ag-incentives.org.

The vast majority of the world’s poorest households depend on farming for their livelihood. In the past their earnings were often depressed by their own country’s policies, which had pro-urban and anti-agricultural and anti-trade biases. While progress has been made over the past two decades by numerous developing countries in reducing those policy biases, many welfare- and trade-reducing price distortions remain intersectorally as well as within the agricultural sector of low-income countries.
 
Where is there still a policy bias against agricultural production? To what extent has there been ‘overshooting’ in the sense that some developing country food producers are now being protected from import competition, following the examples of earlier-industrializing economies? What are the political economy forces behind the more-successful reformers? How important have international forces been relative to domestic political forces in bringing about reform during the past two decades? How important are the potential direct contributions from agricultural policy reform relative to the indirect contributions from non-agricultural policy reforms? For any particular developing country, what is the relative contribution of own-country policies versus those of other developing countries and of high-income countries in affecting net farm incomes? What policy lessons can be drawn from those differing experiences to ensure better growth-enhancing and poverty reducing outcomes from own-country reforms in the future, including less protectionist ‘over-shooting’?

This major research project is addressing these questions in two stages during 2006-09. The first stage involves a series of national country studies in Africa, Asia, Latin America, and Europe's economies in transition, which has culminated in a set of four regional volumes published in 2008-09. Click here to freely download the Working Paper versions of those books’ chapters (with their long appendixes) and the associated national spreadsheets, and click here to download the ebooks. Those books have been summarized and supplemented with overviews of policy trends since the 1950s in more-advanced economies, together with trade restrictiveness and global, economy-wide CGE modeling analyses so as to get a better picture of the world’s distortions to agricultural incentives. That synthesis is published in a global overview volume, released in October 2009 and accessible by clicking here.

While those books on the extent of distortions were being completed, the second stage of the project began. It uses econometrics to estimate the political economy reasons behind the pattern of distortions across countries, commodities, and over time, and the inequality, poverty, and other economic effects of current versus alternative policy regimes for individual countries. Two books from Stage 2 were completed during 2009. Click here to access the Working Paper versions of those books’ chapters and of related papers prepared as part of this project. Click here to download a copy of the Inequality and Poverty e-book. To order hard copies of the following World Bank books, click here.

  • Anderson, K. and J. Swinnen (eds.), Distortions to Agricultural Incentives in Europe’s Transition Economies, Washington DC: World Bank, June 2008
  • Anderson, K. and A. Valdés (eds.), Distortions to Agricultural Incentives in Latin America, Washington DC: World Bank, October 2008
  • Anderson, K. and W.A. Masters (eds.), Distortions to Agricultural Incentives in Africa, Washington DC: World Bank, March 2009
  • Anderson, K. and W. Martin (eds.), Distortions to Agricultural Incentives in Asia, Washington DC: World Bank, March 2009
  • Anderson, K. (ed.), Distortions to Agricultural Incentives: A Global Perspective, 1955 to 2007, London: Palgrave Macmillan and Washington DC: World Bank, October 2009, Recipient of the Australian Agricultural and Resource Economics Society’s Quality of Research Discovery Prize, 2010 and of the (US) Agricultural and Applied Economics Association's 2010 Bruce Gardner Memorial Prize for Applied Policy Analysis.
  • Anderson, K., J. Cockburn and W. Martin (eds.), Agricultural Price Distortions, Inequality and Poverty, Washington DC: World Bank, March 2010
  • Anderson, K. (ed.), The Political Economy of Agricultural Price Distortions, Cambridge and New York: Cambridge University Press, September 2010

Further details of the project can be obtained from Kym Anderson or Ernesto Valenzuela, who were with the Development Research Group of the World Bank in 2007 before returning to academia. They can be contacted at kym.anderson@adelaide.edu.au and at ernesto.valenzuela@federation.edu.au. The updated database to 2010 has been compiled by kym.anderson@adelaide.edu.au and signe.nelgen@gmail.com.