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GTAP Resource #2690

"Global Income Distribution and Poverty in the Absence of Agricultural Distortions"
by Medvedev, Denis, Maurizio Bussolo and Rafael De Hoyos

Trade distortions in agriculture and food represent the last major bastion of protection and have proven to be the main point of contention in recent multilateral trade negotiations. Using a newly developed dataset and methodological approach for evaluating the poverty and inequality effects of policy reforms—the GIDD—this paper has evaluated the potential impacts of the removal of agriculture trade distortions on the global income distribution. There are three main messages emerging from our analysis. First, the liberalization of agriculture and food markets is unlikely to have large effects on global poverty. Our results show that the incidence of extreme poverty (US1 per day, PPP) could rise by 0.2 percent, while moderate poverty (US2 per day, PPP) is likely to fall by 0.3 percent. The second message is that these small aggregate changes are produced by a combination of offsetting trends at the regional and country levels. Thus, farmers in Latin America—the region that accounts for less than 5 percent of global poverty—experience significant income gains, while almost 15 million agriculture producers in South Asia—where half of the world’s poor reside—fall below the extreme poverty line. Third, the distributional changes due to agricultural trade reform are also likely to be mild, but exhibit a strong regional pattern. Inequality is likely to fall in regions such as Latin America, which are characterized by high initial inequality, and rise in regions like South Asia, characterized by low initial inequality.

Resource Details (Export Citation) GTAP Keywords
Category: 2008 Conference Paper
Status: Published
By/In: Presented at the 11th Annual Conference on Global Economic Analysis, Helsinki, Finland
Date: 2008
Created: Medvedev, D. (4/14/2008)
Updated: Medvedev, D. (4/14/2008)
Visits: 2,024
- Agricultural policies
- Economic analysis of poverty

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