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My Policies or Yours: Does OECD Support for Agriculture Increase Poverty in Developing Countries?

Author

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  • Margaret McMillan
  • Alix Peterson Zwane
  • Nava Ashraf
Abstract
This paper investigates the impact of rich-country agricultural support on the poor. Using non-parametric analysis we establish that the majority of poor countries are consistently net importers of food products that are heavily supported by OECD governments. Using a cross-country regression framework we measure the overall impact of agricultural support policies in rich countries on poverty and average incomes in poor countries. We find no support in the cross-country analysis for the claim that OECD polices worsen poverty in developing countries. To better understand what might drive these results, we turn to national employment and household consumption and expenditure surveys from Mexico. There are four important findings from the country case study: (1) the majority of the poorest corn farmers in Mexico report that they never sell any corn, (2) Mexico's own policies (signing NAFTA) have dramatically reduced the Mexican producer price of corn, (3) US corn subsidies have had a limited impact on this price and, (4) domestic policies have largely cushioned Mexican corn farmers from the drop in corn prices. Taken together, the evidence suggests that a reduction in rich-country agricultural support that raises world food prices is likely to hurt the poorest countries but may have little impact at all on the poorest farmers within these countries.

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  • Margaret McMillan & Alix Peterson Zwane & Nava Ashraf, 2005. "My Policies or Yours: Does OECD Support for Agriculture Increase Poverty in Developing Countries?," NBER Working Papers 11289, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:11289
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    Cited by:

    1. Tedesco, Ilaria & Pelloni, Alessandra & Trovato, Giovanni, 2015. "Oecd Agricultural Subsidies And Poverty Rates In Lower Income Countries," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 3(2), pages 1-19, April.
    2. Joachim Zietz & R. Alan Seals, 2006. "Genetically Modified Maize, Biodiversity, and Subsistence Farming in Mexico," Working Papers 200604, Middle Tennessee State University, Department of Economics and Finance.
    3. Mesbah Motamed & Kenneth A. Foster & Wallace E. Tyner, 2008. "Applying cointegration and error correction to measure trade linkages: maize prices in the United States and Mexico," Agricultural Economics, International Association of Agricultural Economists, vol. 39(1), pages 29-39, July.
    4. Robert C. Feenstra, 2007. "Globalization and Its Impact on Labour," wiiw Working Papers 44, The Vienna Institute for International Economic Studies, wiiw.
    5. Brian, McCaig, 2011. "Exporting out of poverty: Provincial poverty in Vietnam and U.S. market access," Journal of International Economics, Elsevier, vol. 85(1), pages 102-113, September.
    6. Rocchi, Benedetto & Romano, Donato & Hamza, Raid, 2013. "Agriculture reform and food crisis in Syria: Impacts on poverty and inequality," Food Policy, Elsevier, vol. 43(C), pages 190-203.
    7. Puyana, Alicia, 2012. "Mexican Agriculture and NAFTA: A 20-Year Balance Sheet," Review of Agrarian Studies, Foundation for Agrarian Studies, vol. 2(1), July.
    8. Alessandra Pelloni & Thanasis Stengos & Ilaria Tedesco, 2018. "Aid to agriculture, trade and take-off," Working Paper series 18-04, Rimini Centre for Economic Analysis.
    9. Alan Matthews, 2015. "Impact of EU's agricultural and fisheries policies on the migration of third country nationals to the EU," Trinity Economics Papers tep0715, Trinity College Dublin, Department of Economics.
    10. Díaz-Bonilla, Eugenio & Ron, Juan Francisco, 2010. "Food Security, Price Volatility and Trade: Some Reflections for Developing Countries," Price Volatility and Beyond 320195, International Centre for Trade and Sustainable Development (ICTSD).

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    More about this item

    JEL classification:

    • F0 - International Economics - - General
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General

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