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How would global trade liberalization affect rural and regional incomes in Australia?

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  • Anderson, Kym
  • Giesecke, James
  • Valenzuela, Ernesto

Abstract

Agricultural protection in rich countries, which had depressed Australian farm incomes via its impact on Australia’s terms of trade, has diminished over the past two decades. So too has agricultural export taxation in poor countries, which has had the opposite impact on those terms of trade. Meanwhile, however, import protection for developing country farmers has been steadily growing. To what extent are Australian farmers and rural regions still adversely affected by farm and non-farm price- and trade-distortive policies abroad? This paper draws on new estimates of the current extent of those domestic and foreign distortions: first, to model their net impact on Australia’s terms of trade (using the World Bank’s Linkage model of the global economy); and second, to model the effects of that terms of trade impact on output and real incomes in rural versus urban and other regions and households within Australia as of 2004 (using Monash’s multi-regional TERM model of the Australian economy).

Suggested Citation

  • Anderson, Kym & Giesecke, James & Valenzuela, Ernesto, 2010. "How would global trade liberalization affect rural and regional incomes in Australia?," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(4), pages 1-18.
    • Handle: RePEc:ags:aareaj:162050
    DOI: 10.22004/ag.econ.162050
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    References listed on IDEAS

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    1. Tyers,Rod & Anderson,Kym, 2011. "Disarray in World Food Markets," Cambridge Books, Cambridge University Press, number 9780521172318.
    2. Kym Anderson & Peter Lloyd & Donald Maclaren, 2007. "Distortions to Agricultural Incentives in Australia Since World War II," The Economic Record, The Economic Society of Australia, vol. 83(263), pages 461-482, December.
    3. François Bourguignon & Maurizio Bussolo & Luiz A. Pereira da Silva, 2008. "The Impact of Macroeconomic Policies on Poverty and Income Distribution : Macro-Micro Evaluation Techniques and Tools," World Bank Publications - Books, The World Bank Group, number 6586.
    4. Kym Anderson & Will Martin, 2009. "Distortions to Agricultural Incentives in Asia," World Bank Publications - Books, The World Bank Group, number 2611.
    5. Will Martin & Kym Anderson, 2006. "Agricultural Trade Reform and the Doha Development Agenda," World Bank Publications - Books, The World Bank Group, number 6889.
    6. Anderson, Kym & Lattimore, Ralph G. & Lloyd, Peter J. & MacLaren, Donald, 2007. "Distortions to Agricultural Incentives in Australia and New Zealand," 2007 Conference (51st), February 13-16, 2007, Queenstown, New Zealand 10407, Australian Agricultural and Resource Economics Society.
    7. Mark Horridge & Glyn Wittwer, 2008. "Creating and managing an impossibly large CGE database that is up-to-date," Centre of Policy Studies/IMPACT Centre Working Papers g-175, Victoria University, Centre of Policy Studies/IMPACT Centre.
    8. Valenzuela, Ernesto & Wong, Sara & Sandri, Damiano, 2007. "Distortions to Agricultural Incentives in Ecuador," Agricultural Distortions Working Paper Series 48394, World Bank.
    9. François Bourguignon & Maurizio Bussolo & Luis Pereira, 2008. "The Impact of Macroeconomic Policies on Poverty and Income Distribution," PSE-Ecole d'économie de Paris (Postprint) halshs-00754864, HAL.
    10. Kym Anderson, 2009. "Distortions to Agricultural Incentives : A Global Perspective, 1955-2007," World Bank Publications - Books, The World Bank Group, number 9436.
    11. Thomas W. Hertel & L. Alan Winters, 2006. "Poverty and the WTO : Impacts of the Doha Development Agenda," World Bank Publications - Books, The World Bank Group, number 7411.
    12. Vousden,Neil, 1990. "The Economics of Trade Protection," Cambridge Books, Cambridge University Press, number 9780521346696.
    13. Valenzuela, Ernesto & Kym Anderson, 2009. "Alternative Agricultural Price Distortions for CGE Analysis of Developing Countries, 2004 and 1980-84," GTAP Research Memoranda 2925, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    14. Gardner, Bruce L., 2008. "Distortions to Agricultural Incentives in the United States and Canada," Agricultural Distortions Working Paper Series 48573, World Bank.
    15. van der Mensbrugghe, Dominique & Valenzuela, Ernesto & Anderson, Kym, 2009. "Border Price and Export Demand Shocks for Developing Countries from Rest-of-World Trade Liberalization Using the Linkage Model," Agricultural Distortions Working Paper Series 52797, World Bank.
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    Cited by:

    1. Nie, Fei & Li, Jian & Bi, Xiang & Li, Gucheng, 2022. "Agricultural trade liberalization and domestic fertilizer use: Evidence from China-ASEAN free trade agreement," Ecological Economics, Elsevier, vol. 195(C).
    2. James Andrew Giesecke, 2011. "Development of a Large-scale Single US Region CGE Model using IMPLAN Data: A Los Angeles County Example with a Productivity Shock Application," Spatial Economic Analysis, Taylor & Francis Journals, vol. 6(3), pages 331-350, April.
    3. Glyn Wittwer, 2022. "Preparing a multi-country, sub-national CGE model: EuroTERM including Ukraine," Centre of Policy Studies/IMPACT Centre Working Papers g-334, Victoria University, Centre of Policy Studies/IMPACT Centre.
    4. Giesecke, James A. & Madden, John R., 2013. "Regional Computable General Equilibrium Modeling," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 379-475, Elsevier.
    5. Chang, Ching-Cheng & Lin, Kuo-Jung & Lin, Hsing-Chun & Liou, Ruey-Wan & Hsu, Sheng-Ming & Hsieh, De-Yan & Hsu, Shih-Hsun, 2016. "An Economy-wide Analysis of Trade Liberalization Impacts on Rural Household Income in Taiwan," Conference papers 330222, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    6. Kym Anderson, 2010. "The Impact of Manufacturing Protection on Agricultural Incentives in Australia," World Scientific Book Chapters, in: Christopher Findlay & Mari Pangestu & David Parsons (ed.), Light The Lamp Papers on World Trade and Investment in Memory of Bijit Bora, chapter 4, pages 85-115, World Scientific Publishing Co. Pte. Ltd..
    7. Esmedekh Lkhanaajav, 2016. "CoPS-style CGE modelling and analysis," Centre of Policy Studies/IMPACT Centre Working Papers g-264, Victoria University, Centre of Policy Studies/IMPACT Centre.

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    More about this item

    Keywords

    Community/Rural/Urban Development; International Relations/Trade;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies

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