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GTAP Resource #1249

"Processed Food Trade and Developing Countries: Protection and Trade Liberalisation"
by Rae, Allan and Tim Josling

Exports of processed foods from developing countries have expanded rapidly in recent times, contributing to their economic development. Recent published research has shown that the export policies and agricultural resource endowment of the developing country offer significant explanations for this export growth. But what if developing countries further lowered their tariff barriers against imports? What impact would such policy changes have on processed food exports from developing countries? Alternatively, what if processed food trade barriers are lowered in developed countries? And if trade in manufactured goods were to be further liberalised, what might be the impacts on the processed food sectors of developing countries?
An applied general equilibrium model is used to shed light on these questions through simulations of trade policy alternatives. Most developing regions examined had a positive effective protection rate for processed foods in the base year. This effective protection was lowered when such countries reduced their agricultural tariffs. When tariff cuts were extended to manufactured goods, effective protection of food processing in most developing regions increased somewhat, but was still less than base-period protection. For the developing countries, it would appear that comprehensive trade policy reforms, taken by themselves, are about as significant as those of the developed world in terms of contributing to growth in processed food exports from developing countries. Such reforms allow those developing countries with a comparative advantage in food production to expand exports and to take advantage of increased access to other developing countries with a less favourable agricultural resource endowment, as well as to developed country markets.
Keywords: processed food, protection, trade liberalization, exports, developing regions

Resource Details (Export Citation) GTAP Keywords
Category: GTAP Application
Status: Published
By/In: Food Policy 28(2): 147-166.
Date: 2003
Created: Rae, A. (4/29/2003)
Updated: Rae, A. (7/13/2004)
Visits: 2,495
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