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The vast majority of the world's poorest households depend on farming for their livelihood. During the 1960s and 1970s, most developing countries imposed pro-urban and anti-agricultural policies, while many high-income countries restricted agricultural imports and subsidized their farmers. Both sets of policies inhibited economic growth and poverty alleviation in developing countries. Although progress has been made over the past two decades to reduce those policy biases, many trade- and welfare-reducing price distortions remain between agriculture and other sectors as well as within the agricultural sector of both rich and poor countries. Comprehensive empirical studies of the disarray in world agricultural markets first appeared approximately 20 years ago. Since then the OECD has provided estimates each year of market distortions in high-income countries, but there has been no comparable estimates for the world's developing countries. This volume is the first in a series (other volumes cover Africa, Asia, and Latin America) that not only fill that void for recent years but extend the estimates in a consistent and comparable way back in time--and provide analytical narratives for scores of countries that shed light on the evolving nature and extent of policy interventions over the past half-century. 'Distortions to Agricultural Incentives in Europe's Transition Economies' provides an overview of the evolution of distortions to agricultural incentives caused by price and trade policies in the economies of Eastern Europe and Central Asia that are transitioning away from central planning. The book includes country and subregional studies of the ten transition economies of Central and Eastern Europe that joined the European Union in 2004 or 2007, of seven other large member countries of the Commonwealth of Independent States, and of Turkey. Together these countries comprise over 90 percent of the Europe and Central Asia region's population and GDP. Sectoral, trade, and exchange rate policies in the region have changed greatly since the dissolution of the Soviet Union in 1991, but price distortions remain. The new empirical indicators in these country studies provide a strong evidence-based foundation for evaluating policy options in the years ahead.
This volume in the 'Distortions to Agricultural Incentives' series focus on distortions to agricultural incentives from a global perspective.
This paper summarizes evidence on the changing extent of distortions to markets for farm products since the transition away from planned prices began. In particular, it examines the extent to which, following the initial shocks, there has been a gradual improvement in farmer incentives. This new evidence is not inconsistent with that past pattern of earlier-developing countries, but the speed of assistance increase is relatively rapid and is linked with actual or desired accession to the European Union. The final section focuses on future prospects, and in particular on what might be done to avoid agricultural protection levels becoming excessive.
This working paper summarizes annual estimates of covered product Nominal Rate of Assistance (NRAs), for each of the focus economies of Europe's transition economies, their key distortion indicators defined in Anderson et al. (2008), and provides some summary statistics for the region's estimates. Four tables are provided for each country: (a) the NRA to individual farm products covered in the study and their weighted average, using as weights production valued at undistorted prices; (b) the RRA to producers of agricultural tradable, again using as weights production valued at undistorted prices, and the component parts of the RRA calculation; (c) the weights themselves for individual covered farm products and for the residual non-covered group of products, shown as percentages and so they sum to 100 percent; and (d) the trade status of each covered product each year. The NRA in the case of a product having just its output price distorted by government policies is the percentage by which the domestic producer price exceeds the price that would prevail under free markets, that is, the border price appropriately adjusted to account for differences in product quality, transport costs, processing costs, etc. A negative value indicates the domestic price is below that comparable border price.
In a recent survey of European economic growth since 1950, Crafts and Toniolo (2008) conclude that incentive structures are a crucial explanator of comparative growth rates of the economies of east and west Europe. Pre-empting that, a 2006 report on trade performance and policies in Eastern Europe and Central Asia included as one of its key recommendations the need to reduce the mean and variance of the tariff equivalents of trade barriers, and in particular to reduce unilaterally the policy regimes' anti-export bias, especially in countries exporting primary products (Broadman 2006). To progress such reform in Europe's transition economies efficiently and effectively, and to see how recent policies line up with those of the European Union (EU), requires better information on the extent of reform during the past two decades and of current policy influences on incentives within and between sectors. Immediately prior to their transition to market economies, policies in the region greatly distorted producer and consumer incentives, especially for agricultural products. Those distortions have been reduced substantially in several countries, but large variations remain across the region and distortions appear to be growing again in some countries. Now is thus an opportune time to examine how policies affecting agriculture are evolving in this region, including as part of the adjustment to EU accession for ten of the transition economies in the region.
The vast majority of the world s poorest households depend on farming for their livelihoods. During the 1960s and 1970s, most developing countries imposed pro-urban and anti-agricultural policies, while many high-income countries restricted agricultural imports and subsidized their farmers. Both sets of policies inhibited economic growth and poverty alleviation in developing countries. Although progress has been made over the past two decades to reduce those policy biases, many trade- and welfare-reducing price distortions remain between agriculture and other sectors and within the agricultural sector of both rich and poor countries. Comprehensive empirical studies of the disarray in world agricultural markets appeared approximately 20 years ago. Since then, the Organisation for Economic Co-operation and Development has provided estimates each year of market distortions in high-income countries, but there have been no comparable estimates for the world s developing countries. This volume is the third in a series (other volumes cover Asia, Europe s transition economies, and Latin America and the Caribbean) that not only fills that void for recent years but extends the estimates in a consistent and comparable way back in time and provides analytical narratives for scores of countries that shed light on the evolving nature and extent of policy interventions over the past half-century. 'Distortions to Agricultural Incentives in Africa' provides an overview of the evolution of distortions to agricultural incentives caused by price and trade policies in the Arab Republic of Egypt plus 20 countries that account for about of 90 percent of Sub-Saharan Africa s population, farm households, agricultural output, and overall GDP. Sectoral, trade, and exchange rate policies in the region have changed greatly since the 1950s, and there have been substantial reforms since the 1980s. Nonetheless, numerous price distortions in this region remain, others have been added in recent years, and there has also been some backsliding, such as in Zimbabwe. The new empirical indicators in these country studies provide a strong evidence-based foundation for assessing the successes and failures of the past and for evaluating policy options for the years ahead.
The vast majority of the world's poorest households depend on farming for their livelihood. During the 1960s and 1970s, most developing countries imposed pro-urban and anti-agricultural policies, while many high-income countries restricted agricultural imports and subsidized their farmers. Both sets of policies inhibited economic growth and poverty alleviation in developing countries. Although progress has been made over the past two decades to reduce those policy biases, many trade- and welfare-reducing price distortions remain between agriculture and other sectors as well as within the agricultural sector of both rich and poor countries. Comprehensive empirical studies of the disarray in world agricultural markets first appeared approximately 20 years ago. Since then the OECD has provided estimates each year of market distortions in high-income countries, but there has been no comparable estimates for the world's developing countries. This volume is the second in a series (other volumes cover Africa, Asia, and Europe's transition economies) that not only fills that void for recent years but extends the estimates in a consistent and comparable way back in time and provides analytical narratives for scores of countries that shed light on the evolving nature and extent of policy interventions over the past half-century. 'Distortions to Agricultural Incentives in Latin America' provides an overview of the evolution of distortions to agricultural incentives caused by price and trade policies in the economies of South America, plus the Dominican Republic, Nicaragua, and Mexico. Together these countries constitute about 80 percent of the region's population, agricultural output, and overall GDP. Sectoral, trade, and exchange rate policies in the region have changed greatly since the 1950s, and there have been substantial reforms, especially in the 1980s. Nonetheless, numerous price distortions in this region remain, others have been added, and there have even been some policy reversals in recent years. The new empirical indicators in these country studies provide a strong evidence-based foundation for assessing the successes and failures of the past and for evaluating policy options for the years ahead.
The vast majority of the world's poorest households depend on farming for their livelihoods. During the 1960s and 1970s, most developing countries imposed pro-urban and anti-agricultural policies, while many high-income countries restricted agricultural imports and subsidized their farmers. Both sets of policies inhibited economic growth and poverty alleviation in developing countries. Although progress has been made over the past two decades to reduce those policy biases, many trade- and welfare-reducing price distortions remain between agriculture and other sectors and within the agricultural sector of both rich and poor countries. Comprehensive empirical studies of the disarray in world agricultural markets appeared approximately 20 years ago. Since then, the Organisation for Economic Co-operation and Development had provided estimates each year of market distortions in high-income countries, but there have been no comparable estimates for the world's developing countries. This volume is the third in a series (other volumes cover Africa, Europe's transition economices, and Latin America and the Caribbean) that not only fills that void for recent years but extends the estimates in a consistent and comparable way back in time and provides analytical narratives for scores of countries that shed light on the evolving nature and extent of policy interventions over the past half-century. 'Distortions to Agricultural Incentives in Asia' provides an overview of the evolution of distortions to agricultural incentives caused by price and trade policies in the 12 largest economies of East and South Asia. Together these countries constitute more than 95 percent of the region's population, agricultural output, and overall GDP. Sectoral, trade, and exchange rate policies in the region have changed greatly since the 1950s, and there have been substantial reforms since the 1980s, most notably in China and India. Nonetheless, numerous price distortions in this region remain and others have added in recent years. The new empirical indicators in these country studies provide a strong evidence-based foundation for assessing the successes and failures of the past and for evaluating policy options for the years ahead.
This paper analyzes the political and institutional factors which are behind the dramatic changes in distortions to agricultural incentives in the transition countries in East Asia, Central Asia, and the rest of the former Soviet Union, and in Central and Eastern Europe. The paper explains why these changes have occurred and why there are large differences among transition countries in the extent and the nature of the remaining distortions.
Abstract: A study of distortions to agricultural incentives in 18 developing countries during 1960-84, by Krueger, Schiff and Valdes (1988; 1991), found that policies in most of those developing countries were directly or indirectly harming their farmers. Since the mid-1980s there has been a substantial amount of policy reform and opening up of many developing countries, and indicators of that progress have been made available recently by a new study that has compiled estimates for a much larger sample of developing countries and for as many years as possible since 1955. The new study also covers Europe's transition economies and comparable estimates for high-income countries, thereby covering more than 90 percent of world agricultural output and employment. This paper summarizes the methodology used in the new study (pointing out similarities and differences with those used by the OECD and by Krueger, Schiff and Valdes), compares a synopsis of the indicators from Krueger, Schiff and Valdes and the new study for the period to 1984, summarizes the changing extent of price distortions across countries and commodities globally since then, and concludes by evaluating the degree of distortion reduction over the years since 1984 compared with how much still remains, according to the results of a global economy wide model.