A Global Analysis Of Agricultural Reform In WTO Member Countries
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Xinshen Diao, Agapi Somwaru and Terry Roe The objective was to provide the “ big picture ” PowerPoint PPT Presentation


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A Global Analysis Of Agricultural Reform In WTO Member Countries. Xinshen Diao, Agapi Somwaru and Terry Roe The objective was to provide the “ big picture ”. Computable General Equilibrium (CGE) Model Global Static and Dynamic (DYNAGEM).

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Xinshen Diao, Agapi Somwaru and Terry Roe The objective was to provide the “ big picture ”

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Xinshen diao agapi somwaru and terry roe the objective was to provide the big picture

A Global Analysis Of Agricultural Reform In WTO Member Countries

Xinshen Diao, Agapi Somwaru and Terry Roe

The objective was to provide the “big picture”


Computable general equilibrium cge model global static and dynamic dynagem

Computable General Equilibrium (CGE) Model Global Static and Dynamic (DYNAGEM)


Xinshen diao agapi somwaru and terry roe the objective was to provide the big picture

Main Attributes of a Computable General Equilibrium (CGE): Basic Specification (Circular Flow)

Final Goods:

Supply

Goods & Services

Demand

Final

Goods:

Expenditure

Intermediate

Revenue

Goods:

Intermediate

Supply

Goods:

Revenue

Households

Firms

Rents

Income

Supply

Demand

Factors


Xinshen diao agapi somwaru and terry roe the objective was to provide the big picture

Main Attributes of a Full CGE Model: Additional Institutions

Other countries/

Rest of the World

Government

Transfers

Govt

& Business

Purchases

Imports

Taxes

Exports

Subsidies

Basic CGE Model Structure

Private

Investment

Savings from ROW

Savings

(Net Capital Inflow)

Govt. Savings

(Budget Deficit)

Capital

Account


Xinshen diao agapi somwaru and terry roe the objective was to provide the big picture

DYNAGEM ATTRIBUTES: Intertemporal Structure

CURRENT INCOME

The elliptical box represents exogenous

variables, the rectangular box represents

Consumers' Intertemporal Decisions

endogenous variables. The dashed line

is for revenue flows and solid line is for

commodity flows.

SAVINGS

CONSUMPTION

World Capital Market

FOREIGN ASSETS/DEBT

World Commodity Market

Domestic Commodity Market

IMPORTS

OUTPUT

INTERESTS

DIVIDENDS

&

EXPORTS

Firms' Intertemporal Decisions

ENDOWMENT

INCOME

CURRENT PROFIT

PRODUCTION

INVESTMENT

LABOR, LAND

CAPITAL


More features

More Features

  • Simulates policy changes in counterfactual or “what if” comparisons

  • Easily modified and flexible in the number of sectors and commodities

  • Requires PC with high computational capacities

  • Written in GAMS

  • The model was developed in 1997 and published in the Journal of Economic Integration (2001), the Journal of Policy Modeling (2000), the International Economic Journal (1999)

  • Based on the 1997 global economy (GTAP database version 5)

  • For more information, contact: Xinshen Diao, IFPRI, or Agapi Somwaru, ERS


Commodity and country coverage for the wto study

Australia and New Zealand

Japan and Korea

United States

Canada

European Union

European Free Trade Area

China

Other Asian countries

Mexico

Latin America

South African countries

Rest of the World

Paddy and processed rice, wheat

Other grains (including corn)

Vegetables, fruits and nuts

Oilseeds, vegetable oil

Sugar cane, sugar beets,

processed sugar

Plant-based fibers and other crops

Livestock and livestock products

Beverages, tobacco, other

processed food products

Non-agricultural products

Services

Commodity and Country Coveragefor the WTO study


Road map of the analysis

Road Map of the Analysis

  • Static Model

  • Elimination of import barriers throughout the world

  • Elimination of export subsidies throughout the world

  • Elimination of domestic supportthroughout the world

  • Combining all of the above

  • Dynamic Model

  • Elimination of all trade distortions without TFP growth

  • Elimination of all trade distortions with TFP growth of developing countries

    • (0.02 annually only for the first 10 years of trade reform)


Major findings

Major Findings


Ag policy distortions cause world prices to be 12 lower than they otherwise would be

Ag. Policy Distortions Cause World Prices to be 12% Lower Than They Otherwise Would be


Estimated annual gain in purchasing power 56 billion

Estimated annual gain in purchasing power =$56 billion


In sum

In sum

  • Eliminating global ag. policy distortions would:

    • raise world welfare $56 billion annually

    • raise world agricultural prices 12 percent

  • Roles of policies in reducing world prices:

    • Tariffs (52%)

    • Domestic subsidies (31%)

    • Export subsidies (13%)

  • Developing countries can benefit from further WTO reforms


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