Sources of EC horticultural import growth from developing countries

A decomposition analysis of horticultural trade flows is carried out to identify the main sources of change in EC horticultural imports from different LDC regions. Sources of change are associated with each region's international competitiveness, the relative openness of the EC market, the degree of trade preference enjoyed by the region, and the EC global import growth. The main contribution to the LDC export growth of fruit and vegetables to EC between 1975–79; and 1985–89 is found to be attributable to the global import growth effect. However, it has been significantly counteracted by the negative effect of a declining share of non-EC suppliers as a group. Marked interregional differences in changes in regional preferences show a lack of a strong correlation between LDC export performance and the existence of preferential trade agreements with EC. While the potential for LDC export growth to EC is clear, the results seem to indicate that in general EC protection policies have adversely affected import growth from LDCs. Various factors influencing LDC export performance in horticultural products are discussed. Apart from EC protection policies and changes in trade preferences, domestic supply factors are of significance in explaining export growth, including a liberal trading environment, but also specific policies to promote exports of horticultural products. While non-price competition weakens the discriminatory effect of preferential tariffs, there is a pressing need for developing countries to adapt to the demands of the European distribution system relating to quality, grades, and regularity of supplies.     

Implications of agricultural trade liberalization for the developing countries

The developing countries as a group could expect to experience only small welfare gains if they chose not to actively participate in agricultural trade liberalization and relied solely on the benefits of partial liberalization in the OECD countries. Participation along the lines of the Dunkel package, with the developing countries reducing positive assistance by less than the developed countries, would yield gains of the order of US $20 billion. More comprehensive participation in trade liberalization involving reductions of both positive and negative protection would almost triple these welfare gains. While some developing countries do not gain from trade liberalization even with full participation, the number of such countries and the magnitude of their losses are greatly reduced.     

World market integration for export and food crops in developing countries: a case study for Mali and Nicaragua

Using a generalized error correction model, this article measures and compares market integration for export cash crops versus imported food crops for Mali and Nicaragua, and computes transmission elasticities between changes in the goods’ border and domestic prices. Both Mali and Nicaragua obtain the bulk of their export revenue from a particular agricultural commodity—cotton for Mali and coffee for Nicaragua—and both import the same key staple food of rice. To reap the economic gains from this trade specialization, the two countries’ agriculture must be well‐integrated into world markets. The two countries present an important policy contrast that affects their degree of world market integration and price transmission. In Mali, a parastatal enterprise controls its cotton industry, while Nicaragua has less state direction over agriculture. Reflecting this difference, the results show that for both its main export and import commodity, Nicaragua is more integrated into world markets and has higher price transmission than Mali. The results for Nicaragua also show much higher integration and price transmission for its main agricultural export (coffee) than its major import (rice).     

International trade and agricultural development in developing countries: Significance of the Uruguay Round of GATT negotiations

Liberalization of world trade in agricultural products ranks high on the agenda of the Uruguay Round. After a period of more than six years, however, the negotiations have not been concluded. Nevertheless, an outcome seems to be in sight. The agreement will most likely not result in a move to freer trade. It seems that domestic policies will become even more regulative than in the past in an attempt to cut exportable surpluses and to ease trade tensions among the main exporting nations. This paper explores possible impacts of the GATT Round on agricultural development in developing countries. Agricultural development is more than only growth in agricultural production or productivity. However, it is argued in the paper that other variables which also indicate agricultural development are often closely correlated with growth in production and productivity. Trade in agricultural products is not always an engine for agricultural development. If internal divergences are not accounted for by appropriate domestic policies, trade may be even harmful to agricultural development. Hence, empirical research based on cross-country analysis does not provide a clear answer about the role of trade for development. Past policies in industrialized countries have most likely had a negative effect on developing countries as a group; however, the effects differ widely across countries. Liberalization policies in industrialized countries would not just reverse these negative effects for developing countries. Price reduction in industrialized countries may not result in the often-cited production decline in the short term. Present X-inefficiency in agriculture will be reduced by liberalization, leading to an outward shift of the supply curve. Hence, liberalization may not lead to higher world market prices for temperate-zone products in the short and medium term. Apart from this, empirical models differ widely in the price effects they predict. The expected outcome of the Uruguay Round – increased regulation of domestic policies – is likely both more negative for developing countries than past protectionist policies and worse than an overall liberalization. World market prices will increase, uncertainty and instability can be expected to grow, and food aid may become less available. There will be a need to react to these challenges with measures on the international and national level. Initiatives to deal with food crises in developing countries and to stimulate liberalization in developing countries should be considered. Finally, developing countries should be made aware that their own domestic policies have a much greater economic impact than policies in other countries, even if the latter are as protectionist as current agricultural policies in the industrialized world.     

Modeling household behavior in developing countries: discussion

A large and growing body of literature has examined how agricultural households cope with risk. Much of the work has focused on which types of households are better able to smooth consumption, testing whether households with more resources and greater access to income-smoothing institutions, such as credit markets or well-functioning labor markets exhibit greater consumption smoothing. However, income shocks may have different effects upon different individuals within households, and differences in individual ability to smooth income or consumption may have welfare consequences which go beyond foregone income. The development of collective household models challenges the assumption that individuals within households maximize a single utility function. The assumption of income pooling has also been rejected in a growing body of empirical research on intrahousehold resource allocation. However, research on risk-pooling within households and differences in individual abilities to smooth consumption is relatively new. Selected papers are discussed.     

Agricultural productivity in developing countries

This paper examines changes in agricultural productivity in 18 developing countries over the period 1961–1985. We use a nonparametric, output-based Malmquist index and a parametric variable coefficients Cobb-Douglas production function to examine, whether our estimates confirm results from, other studies that have indicated declining agricultural productivity in LDCs. The results confirm previous findings, indicating that at least half of these countries have experienced productivity declines in agriculture.     

Warehouse receipt financing for smallholders in developing countries: Challenges and limitations

A warehouse receipt is a document issued by a warehouse operator as evidence that a specified commodity of stated quantity and quality has been deposited at a particular warehouse by a named depositor. When backed by an appropriate legal and regulatory framework, a warehouse receipt becomes a formal financial instrument that allows the depositor to confer a security interest in the stored commodity to another party without requiring physical delivery, allowing the warehouse receipt to serve as possessory collateral for a loan. Warehouse receipt financing, in theory, permits smallholders farmers in developing countries to store their surplus safely in a modern warehouse to sell at a later date when prices are higher, while allowing them to use the stored commodity as collateral to secure a loan to finance household consumption and investment needs in the interim. However, in practice, warehouse receipt financing generally has not been embraced by smallholders in developing countries in which it is available. Here, we develop and analyze a formal stochastic dynamic model of seasonal commodity marketing that exposes the transaction cost and risk reallocation problems that undermine the benefits of warehouse receipt financing to smallholders.     

Evaluating land administration projects in developing countries

There have been various approaches to evaluating and comparing the performance of land administration and land titling projects in developing countries. Many of these consider the efficiency of land administration processes and the capacity of institutions. This paper presents the results of research undertaken by the authors and considers the most common approaches taken to date, and the strengths and limitations of these approaches. The authors argue that improvements are needed to project design and make recommendations for more effective use of socio-economic analyses.     

Integration in the Norwegian pulpwood market: domestic prices versus external trade

Pulpwood from Norway spruce (Picea abies (L.) Karst) traded domestically in Norway, imported to Norway, or exported from Norway is investigated with respect to commodity homogeneity and market integration. The prices imply that pulpwood from Norway spruce is a homogenous commodity, and the three price series are analyzed with respect to market integration. Using the cointegration estimator two cointegrating vectors are found within the system, and the weak Law of One Price can be imposed on domestic- and import prices. Imports are weakly exogenous to the two other variables, indicating that international pulpwood prices leads the domestic market.     

Trade and agroindustrialization in developing countries: trends and policy impacts

There have been important changes in the international trade of processed and high-value added food products from developing countries over the past several decades. One of them has been the emergence of oilseeds and fruits and vegetables, replacing traditional products such as sugar, coffee, and cocoa as the main exports from developing countries. Another trend has been the collapse of African agroindustrial exports and the increase of exports from Asia. The paper highlights key trends, and explores possible reasons for the trends, focusing on trade policies in less-developed countries (LDCs) and developed countries (DCs). The paper argues that national trade policies and other economic policies appear to have been relatively supportive of agroindustrial production and exports in Asia. In contrast, policies have had more mixed effects in Latin America and the Caribbean (LAC), and seem to have been just one component in a larger array of forces inhibiting economic development in Africa. The performance of agroindustrial production and exports from LDCs may be now more dependent than ever on the completion of reforms in the agricultural trade policies of DCs. For Africa, however, a more supportive international environment and better macroeconomic and trade policies will not be enough to ensure a thriving agroindustrial sector within a broader process of economic development until military confrontations stop.     

Tariff equivalents of nontariff measures: the case of European horticultural and fish imports from African countries

In the context of the Partnership Agreements between the European Union (EU) and the African, Caribbean, and Pacific countries, this study estimates ad valorem tariff equivalents of European food safety standards on imports of key horticultural and fish products from Kenya, Tanzania, Uganda, and Zambia. The study uses an extension of the price‐wedge method to account for imperfect substitution and factor endowment in monopolistic competition. The estimated tariff equivalents are 55% and 98% for imports of fresh peas from Zambia to the Netherlands and the U.K., respectively. They range from 39% to 64% for imports of green beans and avocados from Kenya and from 63% to 270% for imports of frozen fish fillets in EU countries from the East African Community. We also observe large variations in tariff equivalents for the horticultural and fish products over time and EU importing countries.     

Poverty,food intake,and malnutrition: implications for food security in developing countries

The relation between household income, food intake, and nutritional status in less developed countries is examined, and a framework that explicitly relates household behavior patterns with public policy options designed to improve the nutritional status of the rural and urban poor is presented. For rural areas, nutritional and health status depends largely upon the levels of private inputs provided by households. In turn, level depends upon income. Consequently, increasing income may also lead to improvements in nutrition and health status. Regrettably, post-World War II development strategy in most developing countries has undervalued the potential contribution of agricultural development to economic development. Domestic economic policies practiced thus far have most probably had serious negative effects upon the nutrition and heal status of the poorest segments of developing nations. Economic development policy reform is therefore called for as a measure to alleviate rural poverty in developing countries.     

International trade in a differentiated good: Trade elasticities in the world rice market

In many previous rice trade models, the commodity has been regarded as a homogeneous product. However, homogeneity is not an appropriate assumption, given the various types of rice that are traded and consumed. Parameters estimated from these models, therefore, do not reflect the real world market for rice and, hence, may mislead decision makers who use the results for policy evaluation purposes. This study uses an Armington approach to model the world rice trade as a differential good market and to derive trade elasticity parameters.     

Agricultural taxation in developing countries: a survey of issues and policy

This study surveys the experience of agricultural taxation in developing countries in the context of the ongoing policy debate about the tax structure and administration affecting agricultural producers. Using the examples of a number of countries, it analyzes the conceptual and practical problems associated with different tax regimes. Governments in most countries have reduced indirect (export) taxes on agricultural producers. However, the revenue from direct taxes on farmers has not increased. A major problem in most countries has been the measurement of (actual) agricultural income. Different measures for presumed income have been used with varying success. They seem to have the most potential for increased revenue in many countries, but their effective implementation is constrained by the political and administrative considerations.     

An equilibrium displacement approach to oligopoly market analysis: an application to trade in the Korean infant formula market

This article uses an equilibrium displacement model (EDM) to assess the impact of a change in trade policy in the Korean infant formula market that is assumed to be oligopolistic. Domestic oligopolists compete in a market for a homogenous good with importing firms who enjoy the same level of market power as the domestic producers. Within an EDM framework, we investigate how the market adjusts to a new equilibrium in response to an external policy shock that improves access to foreign goods. Our empirical work consists of two steps. We first econometrically estimate the market demand elasticity and market power parameter. Then, using these estimates, we simulate our EDM model to assess the distributional effects of tariff cuts and other changes in marginal cost. Simulation results show that, with a lower market price and increased consumption, the change in consumer surplus resulting from tariff reduction is unambiguously positive, but that the change in social welfare can be in either direction, depending on who receives market rents associated with imports. When importing firms are domestic, the domestic welfare change is definitely positive. However, in the case of foreign importing firms, the direction of the welfare change crucially depends on the demand elasticity.     

Economies of scale and market structure in international grain trade

A large body of literature has examined international grain trade in imperfectly competitive models. The article develops a two-stage duopoly model that considers a private trader and a State Trading Enterprise (STE) competing on a foreign market. The key difference between the private trader and the STE is their international organization; while the STE makes use of external agents to export, the private firm may choose to internalize international transactions. The game is solved for different modes of competition and under both assumptions of homogeneous and differentiated products, in order to assess how these assumptions affect the outcome of the game. The results of the game are examined by using numerical examples. The analysis shows that external shocks on export markets may result in a change of market structure and, consequently, of market shares. These effects depend on the initial market structure. Furthermore, the degree of product differentiation and the assumed mode of competition significantly affect the relative values of transaction and fixed costs at which the market structure changes.     

Nonmarket valuation in developing countries: incorporating labour contributions in environmental benefits estimates

There are limitations associated with the application of nonmarket valuation techniques, including choice experiments, in subsistence economies. In part, this is due to the concern that using money as a mode of contribution may not capture the potential contribution of low‐income households. To address this limitation, respondents in this study were provided with the option of contributing towards the management of invasive plants in labour terms if they were unwilling to contribute in monetary terms. The results show that the existing practice of using dollar values to estimate willingness to contribute may disproportionately exclude the concerns of some groups within the community. The analysis also indicates that allowing respondents to express their willingness to contribute in labour increases their participation in environmental decision‐making processes and hence increases the estimated value of forest ecosystem services. This study contributes to the limited empirical literature on the development of nonmarket valuation surveys, particularly choice experiments, in low‐income countries in general and rural areas in particular.