Agricultural Policy and Trade
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This module is concerned with issues which are critical to the current and future welfare of mankind. Agriculture (broadly defined) is the source of nearly all of the world’s food and also provides industrial raw materials. High quality food systems are vital to all countries, whether developed or developing. At the heart of effective food systems are complex webs of local, national, regional and global trade.
Both agricultural and trade policies have profound effects on the evolution of agriculture and food systems, on the livelihoods of all who depend on these, and on the natural resource environment. These effects are strongest in poorer countries due to the larger shares of agriculture and linked activities in total employment and income, and because food expenditures are a higher proportion of the budgets of the poor.
Objectives and learning outcomes of the course
- The neo-classical arguments about: absolute and comparative advantage; the gains from trade; factor intensities and factor prices (under trade; trade and income distribution.
- The critiques of the neo-classical model and basics of the new trade theories.
- The purposes and effects of policy instruments which restrict free trade (tariffs, quotas etc) and how to analyse them.
- The economic linkages between domestic agricultural policies and the global economy.
- The effects on the agricultural sector and agricultural trade of changes in the real exchange rate and other economy-wide factors, and how to analyse them.
- The indicators commonly used in trade policy analysis and how to calculate and evaluate them critically.
- The relationships central to the trade–environment debate and the relative roles of trade agreements and environmental agreements in alleviating the extent of transboundary externalities.
- The current issues in international trade, including the multinational trade negotiations under the World Trade Organisation (including the Uruguay Round and Doha Development Agenda) and regional trade agreements (such as the North American Free Trade Agreement and EU Cotonou Agreement).
Scope and syllabus
Understanding agricultural policy and trade requires knowledge
- of the major economic, political, welfare and environmental issues which interact with agricultural trade;
- of theories that can be used to analyse these issues;
- of the nature of different policies affecting agricultural trade and domestic food and agriculture;
- of analytical techniques for investigating subsidy or tax effects of different policies; and
- of global agreements and organisations governing agricultural trade and policy.
The way that these topics all interact with each other poses challenges in attempts to develop a simple linear structure for this module. There is, however, a strong logic to the structure adopted in presenting this material.
The module begins by introducing the importance of major issues in agricultural production and development in both developed and developing countries and their basic interactions with trade policies. In a sense the rest of the module provides a progressive deepening in coverage of the issues introduced in Unit 1. Thus Units 2 and 3 give an introduction to trade theory, and Unit 4 then discusses specific problems that are not adequately addressed by standard trade theory.
Subsequent units build on the foundations provided by units one to four as they examine in more detail key issues introduced in Unit 1 and listed above, with the help of theoretical understanding provided in Units 2 to 4 and with progressively greater understanding of the interactions between these different issues. Thus despite the logic in the ordering of units, you will frequently need to refer back to earlier material as you study the later units (and you may at times wish to read ahead if you want to quickly go beyond necessarily more narrow treatment of a topic in earlier units).