Previous PageTable Of ContentsNext Page


APPENDIX 4


REVIEW OF POLICY ALTERNATIVES TO DEVELOPING COUNTRIES

Policy Efficiency Concerns Compliance with GATT Comments
Output Price Support Inefficient targeting, resource mis-allocation, can be high cost. Poor: subject to limitations outside of which distorts prices and increases AMS. May be a case for price stabilization involving limited support. Generally regressive in effect . Difficult to target.
Input subsidies Resource mis-allocation, can be high cost. Moderate: may be used under certain conditions. Otherwise contributes to AMS and price distortion. Offers a degree of targeting: marginally preferred to output price support. Distributionally regressive.
Credit subsidy Efficient targeting, relatively efficient resource allocation. Moderate/good: less distorting effect, possibility of exemption. More favoured form of intervention, and potentially easy to target.
Food security stocks Minimum distorting effect when objective of stocks is to eliminate extreme market fluctuations only and not to maintain a narrow market price band. Moderate/good: purchases and sales can be at administered prices, but subsidy to producers must be included in AMS. Such stocks must be integral part of national food security programme. Process of stock accumulation and disposal need to be financially transparent.
Subsidized food distribution Market distortion is minimized when subsidized transfers are well targeted and, in the case of general subsidies, the market is not crowded out by too low and static subsidized prices. Good: eligibility to receive food an/or money to buy food at market or subsidized prices subject to clearly defined criteria. Subsidization of prices on a regular basis also permitted. Food purchases by government to support subsidized programmes shall be at market prices; required financial and administrative transparency.
Non-tariff barriers Inefficient resource allocation; tariffs preferred. Poor: distorts prices and increases AMS, tariffs should replace non-tariff barriers. May need to phase out tariffs slowly.
Direct income payments If feasible might involve excessive cost. Good: no distorting effects, no increase in AMS provided meet criteria. Not feasible in most developing country contexts.
Public investment (extension, research, infra-structure, marketing and storage facilities) Efficient resource allocation with minimum distortion of market activity. Good: in general no distortionary effects or increases in AMS. Results may be too long-term, particularly infrastructure. Investment in marketing and storage most beneficial. Difficult to target.

Source: FAO, 1994. A Preliminary Assessment of the Uruguay Round Agreement on Agriculture, Marrakesh,
12-15 April 1994.

REFERENCES

ADB, 1994, Key Indicators of Developing Asian and Pacific Countries, Economics and Development Resource Centre

Anon., 1996, So Our Rice Bins May Always Be Full, The Balay Declaration of the Southeast Asian NGO Conference on Trade and Food Security, Balqy Kalinaw International Center, University of the Philippines, Quezon City, 13-16 Feb. 1996

Booth, A., 1995, Development Challenges in a Poor Pacific Economy: The Case of Papua New Guinea, Pacific Affairs

Cameron, J., 1991, Practical Economies of Food and Nutrition Policy in Small, Open Economies: A Case Study of Four Pacific, Societies, FAO's Nutrition Consultants' Reports Series No. 87

Decloître, 1995, In the Red, Pacific Islands Monthly, June 46-47

Elek, A. et al, 1993, Liberalisation and Diversification in a Small Island Economy: Fiji since the 1987 Coups, World Development

FAO, 1994, Final Report of the International Conference on Nutrition Follow-up Meeting for South Pacific Countries, Nadi, Fiji, October 1994

Fleming and Hardaker, 1995, Pacific 2010: Strategies for Polynesian Agricultural Development, National Centre for Development Studies

Grynberg, R., 1994, The Closure of the Uruguay Round and its Impact Upon Forum Island Countries, University of the South Pacific

PECC, 1995, Pacific Economic Development Report 1995: Advancing Regional Integration, Pacific Economic Cooperation Council, Singapore

UNDP, 1994, Pacific Human Development Report

UNFPA, 1995, Population IEC in the Pacific Island Countries: Trends and Challenges, Discussion Paper No. 6

Previous PageTop Of PageNext Page