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« Ahmadinejad, Historian and Logician | Main | The Problem with Wikipedia - II »

December 14, 2005

Comments

VH

@dsquared:
"not to poor countries in general - two weeks ago or so I read a paper which tried to estimate the whole shabang"

I can only judge first hand from the Philippines, where I stay half of the year. Their crops are mostly coconut and pineapples. EU farmers didn't yet manage to grow those.

As to diary products (cows don't thrive well in the tropics), and looking at supermarket shelves all over the country, I only see New-Zealand stuff.

Corn and sugar might be a problem. But corn is mostly used as livestock food, and there are serious efforts to convert sugar into ethanol to alleviate the rising oil bill.

There is another aspect why EU food doesn’t really compete with local crops, and that is roads-to-market. Most roads are dust roads and no decent truck can use it. Many crops are just processed locally. In case of virgin coconut oil (an important export product), the final product is brought to collection stations by sheer manpower, not by mechanical transport.

ivan

I think that the evidence is fairly conclusive (see Arvind Panagyria, Jagdish Bhagwati, studies of the World Bank: http://econ.worldbank.org/external/default/main?theSitePK=544849&contentMDK=20716544&pagePK=64168182&piPK=64168060), that eliminating subsidies, especially export subsidies will hurt instead of benefit the poorest countries. Most of them are net importers of food. This empirical evidence gets by the way some political credibility due to the fact that the elimination of those subsidies are demanded not by the poorest countries but by middle-income countries like Brazil and India, who have an comparative advantage and are net-exporters.

Agricultural reforms have only positive results for the real poor countries when it is comprehensive: when not only subsidies but all other barriers (tariffs, quota’s, non-tariff barriers) against market entry are eliminated. In fact the poor countries will gain most if those barriers are lifted not only by the West, but by countries like Brazil and India. Their barriers are indeed much higher than those of the U.S. or Europe. But they don’t want to lower tariffs which is why they concentrate on subsidies, where the West is the major villain. And Oxfam of course obliges. But it’s doubtful if they will help the most neediest this way.

Whatever the case, subsidies, and again especially export subsidies, are only a small part of the gamut of protectionist measures in place anyway. If we really want to help the poorest of the poor concentrating on that small part, and ignoring the big picture of overall protectionism, is not what we should do.

As Pietra Rivoli writes in her book about the textile industry, eliminating subsidies will not help farmers in the third world very much, at least not in the short term. Eliminating subsidies is a start but it will not eliminate the real causes of their poverty: the lack of education and reading skills, the lack of property rights, the lack of commercial infrastructure and scientific program’s. All the things where Oxfam (and, I’m sorry to say because I’m one of them, many free traders) do not fight for. In fact, it’s their own government policies (if any), and not that of the U.S. (cotton) or Europe (sugar), that keeps them poor.

We in the West should not be proud. The CAP remains a disgrace and a disaster. It teaches the third world that they should emulate this kind of government intervention, which they of course should not do. That’s why we should ditch the CAP. If we want to try to persuade third world governments that liberalization and free markets is the way forward, for them also, we should set the example and eliminate all kinds of protectionism (N. Gregory Mankiw by the way proposes the use of the word isolationism), starting with the most hurtful: those that limit market access.

dsquared

[Oh yeah, and as far as Mas-Collel goes, it's there, it's just presented as a more general case (since there's really nothing about either the Ricardian model or the HO that says it has to be between nations). ]

If I'd been thinking about this straight for even a minute I'd have realised this, thanks.

Abiola; unsurprisingly, liquid milk is not exported to Africa from Europe. Butter is, and so are powdered milk products.

dsquared

[As to diary products (cows don't thrive well in the tropics), ]

It's not so much that (as Abiola points out, a lot of Africa isn't tropical) as the fact that cows can eat lots of things, but green grass is one of the cheapest and produces the best milk. Personally, whatever happens to agriscience, I am likely to continue to drink organic milk from the UK, because a) I can taste the difference between milk from grass-fed and feed-fed cows and b) I drink milk from cows who aren't fed antibiotics because I like to pay the extra to get milk, rather than a mixture of milk and pus.

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