Food Price and Trade Policy Biases

Abstract

This article demonstrates how governments have distorted food markets in high-income countries, primarily through ineffective trade policies. It begins by reviewing theories on agriculture’s perceived role in development. It then considers a recent World Bank study, which presents evidence of price-distorting policies in both high-income and developing countries. Next, it discusses the contribution of agriculture to the current global welfare cost of distortions to farm and nonfarm goods markets, and the impact of those distortionary policies on income inequality and poverty. The article concludes by assessing the policy implications of the study’s empirical findings.