Agricultural Trade Liberalization and Developing Countries

We examine the effects on developing countries of liberalizing agricultural domestic and trade policies in both the industrial and developing market economies. In order to undertake the analysis, we utilize the SWOPSIM framework to create a static global agricultural net trade model that contains 36 countries or regions and 22 commodities. We find that if the industrial and developing economies liberalize access to their' agricultural markets, world prices of most agricultural goods will increase. Developing countries' producers benefit with increases in income, but consumers lose with a higher food bill. Agricultural trade balances improve, particularly when the developing countries participate in the liberalization process. The gains (or losses) attributed to developing countries, though, are highly skewed. With higher food costs there are potential problems for some low-income countries and low-income consumers.