Chapter 11. Analytical studies of the impact of trade and economic reforms: an overview

11.1 Introduction

This chapter first provides a brief overview of the range of methodological approaches used in recent investigations of the relationship between reform, agricultural performance and food security. The overview serves two main purposes. First it illustrates the types of studies that have informed the reviews of regional experience in the subsequent chapters of Part III. Section 11.3 of this chapter summarizes the evidence and interpretation set out in Chapters 12 to 15. Second it serves to motivate the conceptual framework and associated methodological guidelines for research that are developed in Part IV.

11.2 Methodological approaches

Distinguishing objectives from methodological approaches

Objectives

While there have been few studies that explicitly attempt to assess the impact of specific trade reforms on indicators of food security, there have been many that address one or more aspects of the linkage, for example, the impact of reform on agricultural performance, or the relationship between economic growth and poverty reduction.

Many studies have been primarily concerned with the impacts of reform on poverty levels. Insofar as poverty levels are a determinant of food security these studies provide important findings to a better understanding of the linkages. However most are limited in failing to capture the whole contribution of a change in agriculture sector performance, as outlined in Chapter 3, and as such, do not reflect the implications of, for example, changes in relative food prices and the impacts that these changes can have on expenditure patterns and requirements of net consumers and of net producers. Care should therefore be taken in associating poverty impacts and food security impacts too closely.

Before examining in more detail the methodological alternatives, it is important to recognise whether the focus of the analysis is ex post assessment, i.e. what has been the impact of a certain reform implemented in the past, or ex ante analysis, i.e. what would be the future impact of a simulated policy change or a shock. Although an ex post study can also provide information about the likely future impact of a policy change, the two approaches serve different purposes. Ex post studies are based on a rigorous analysis of the actual past data, while ex ante analysis generally uses a model with a base period. Although the data needs may be less demanding, a model requires behavioural assumptions to be made, for example, relating to supply and demand elasticities.

Whether an ex ante or an ex post approach is adopted, the issue of determining the counterfactual situation can be problematic. Any assessment of the impact of a policy reform requires a benchmark (e.g. of food consumption or income levels) against which to compare the current values (ex post), or the simulated values (ex ante). Even where a benchmark is determined, there is a potential problem of attributing the observed changes to a particular reform, because the outcome could have been influenced by many other factors. Where statistics are not available for two distinct periods in time, a “with and without” approach may be appropriate - comparing households, villages and countries undergoing the reform with those that are not deemed to have been impacted by these reforms. Several studies of structural adjustment programmes have taken this route^[155]. Again, one might not be sure if such comparisons are valid because of the many other factors that could have influenced the outcomes differently in the two samples. By contrast, a counterfactual is constructed in the case of ex ante analyses by simulating the model without the reform.

Methodological approaches

Two recent reviews adopt a fairly standard classification of the available methodological approaches according to whether they are (a) descriptive and/or qualitative; (b) data based and/or survey related; or (c) general equilibrium modelling-based approaches. McCulloch et al.^[156] provide a summary of methodological approaches used both within and across sectors, and a similar but more exhaustive review by Narayanan and Gulati^[157] focuses on the implications of globalization for smallholder agriculture.

Although this categorization provides a useful template, as Dorosh notes in Chapter 13, disentangling the impacts of policy reforms is complex. As observed in Chapter 12 on the African experience, for example, announced policy reforms are not always fully implemented. Other factors, such as terms of trade declines and climatic variation, and the medium-term effects of past policies, can confound the analysis.

We focus here on studies that have taken a quantitative approach to analysis. This does not however negate the importance of qualitative investigation. As Sahn et al. argue, whilst quantitative analysis can more fully address the counterfactual question of what would have occurred in the absence of reforms, they require substantial data and ultimately depend on how well actual economic behaviour is captured by model equations^[158]. It is in informing the latter that more descriptive or qualitative approaches are often required. In many cases therefore, a range of methodological approaches will be adopted in any one study.

In reviewing recent research on the impact of trade policy reform on poverty indicators, Reimer^[159] distinguishes between research that approaches the analysis from the household level, and research that uses economy-wide databases. He uses this distinction to clarify studies into four main groups, depending on whether they make use of:

(a) Cross country regressions, to estimate relationships between trade, growth and poverty indicators at the national level;

(b) Partial equilibrium and/or cost of living approaches using household expenditure data to examine the impact of changes in commodity markets on poverty indicators;

(c) General equilibrium models; and

(d) General equilibrium models used in association with post simulation of household level data, which he terms “micro-macro” approaches as they attempt to take estimates simulated at one level into the analysis at the other level.

These studies have attempted to analyse one or more of the following linkages, that is, the impact of reform on: (i) output prices and/or quantities of goods; (ii) factor prices, incomes and employment; (iii) government transfers; (iv) incentives for investment and innovation; (v) terms of trade; (vi) short term risk and adjustment costs.

Reimer argues that while most studies focus on the first type of linkage, i.e. impacts on prices and quantities, linkage (ii) is potentially the most relevant since households “tend to be much more heterogeneous with respect to income than with respect to consumption”. That is to say, they have different sources of income and it is these sources that are likely to be differentially affected. This point is considered further in Part IV.

The FAO Trade Reforms and Food Security project is most closely associated with investigating linkages (i) and (ii) These are returned to in more detail in Part IV.

There is a long tradition in the use of social accounting matrices (SAMs) and computable general equilibrium models (CGEs) for analysing the impact of policies, especially of trade liberalization, on income distribution and poverty. Recent examples of such applications are studies undertaken for several African countries by the Cornell Food and Nutrition Policy Program. IFPRI has also undertaken similar analyses based on SAMs/CGE models.

The main strengths of the SAM based approach are the comprehensiveness of the coverage of economic accounts, their inter-linkages and the consistency of the accounts (aggregate income must be equal to aggregate expenditure). But a SAM is only a database, not a model. It can be as aggregated or disaggregated as desired, or as permitted by the data. It may focus on a particular sub-sector of the economy on the production side. For example, an agricultural SAM may have 15-20 agricultural sub-sectors (e.g. major individual crops, food crops, export crops, processing, marketing etc) and a smaller number from rest of the economy (industry, services etc.) It could include many household groups that receive incomes from the resources that they provide to these activities, and which consume the products of the activities. In other words, its design can be very flexible, depending on the focus of the study and availability of statistics.

SAMs can be constructed at different levels. Besides the national SAMs, there are analyses based on regional SAMs and village SAMs. Even before a SAM is subjected to some form of behavioural modelling analysis, the statistics can be very revealing. For example, a SAM will show income levels generated by various economic activities, and their distribution to various household groups. Thus, it already illustrates a lot about how various economic sectors are contributing to household incomes and food security.

CGE models are based on a SAM database. However, the construction of a CGE requires much additional information, e.g. how various economic accounts would be linked, parameters describing how producers, consumers and other economic agents would react (supply-demand elasticities, substitution elasticities). Once constructed, they can be used to analyse the impact of numerous alternative policy scenarios. A major advantage of CGEs is their ability to capture linkage, or multiplier effects.

The following sub-sections introduce a number of examples of the application of the types of approaches discussed above as used in the analysis of multilateral liberalisation and or unilateral liberalisation.

Approaches to the analysis of multilateral liberalization

Although this section draws upon a wide literature, it is not intended as a comprehensive review. Rather, the objective is to consider the merits of different broad approaches to analysing the impact of reform, and more specifically, how these approaches have been adapted to consider specific impacts on food security.

Of particular relevance to this publication are first, a series of exercises that have attempted to analyse the impact of the WTO Uruguay Round Agreement on Agriculture (UR AoA), both before (ex ante) and after (ex post) the agreement was reached; and second, a new literature that is repeating these types of analyses in light of the launch of the Doha Round of multilateral trade negotiations.

The majority of the ex-ante studies employed CGE modelling based approaches. In a review of these studies, FAO^[160] summarizes the results of a range of exercises that used global models such as the WFM, RUNS, and ATPSM. Of interest to the analysis of food security implications, the review notes that as a result of predicted world price changes in the different models, the food import bill for developing countries was projected to increase from about US$ 40 billion to US$ 65 billion in 2000 of which 15 percent could be attributed to the UR AoA.

As data on the actual impacts became available, more qualitative and descriptive approaches to ex-post analysis were employed. Using the findings from 14 developing country case studies^[161], FAO^[162] suggests that when considering whether any trade related growth can be attributed to the UR, the evidence appears to be mixed. The study used a range of data series to compare for example, trends in the ratio of the food import bills to total agricultural export earnings. The study concludes that while trade liberalization led to an almost instantaneous surge in food imports, countries were often not able to increase exports due to significant supply-side constraints.

Prior to the 1999 WTO conference in Seattle, a number of initiatives to model the impact of further liberalization were initiated by the World Bank. Anderson, Hoekman et al.^[163] used a modification of GTAP to analyse six alternative scenarios running from post-UR until 2005. Hertel et al.^[164] used GTAP to consider the effects of 40 percent cuts in 2005 in agricultural protection, services protection and manufactured goods tariffs. Hertel and Martin^[165] found that that when tariffs on manufactured goods are cut globally by 40 percent, agricultural exports of developing countries as a whole would hardly change, but in East Asia food imports would increase while in Latin America and SSA, exports would increase.

One of the criticisms of such models is that they fail to disaggregate the impact over different groups of individuals (or, as in a number of the World Bank studies, even between different countries within regions). A number of studies, for example Diaz-Bonilla et al.^[166] and McCalla and Valdés^[167] have since attempted to break down the country level aggregation on the basis of food security concerns, but as yet this has not been fully incorporated into mainstream modelling exercises. More recently, some progress has been made on disaggregating impacts within countries, for example at household level, in these global trade models.

This new literature is emerging in the light of the Doha declaration, and which goes some way to addressing the criticisms of past approaches. In May 2002, the OECD held a “Global Forum on Agriculture” which was concerned with “what can be done to ensure that the potential gains for the poor of agricultural trade reforms are realised, and that the possibly adverse effects on some groups are mitigated”^[168]. A number of relevant papers were discussed at the Forum. Beghin et al.^[169] took a standard approach, using a dynamic global CGE model to quantify the impact of trade and domestic agricultural distortions of high-income countries on terms of trade, welfare and trade flows of developing economies and their partners. They did this by modelling the removal of all export subsidies, tariffs and TRQ schemes, and output and input subsidies affecting production decisions in high-income countries.

Other papers attempted to overcome some of the limitations referred to earlier. Hertel et al.^[170] focus on the impact of trade liberalization on households at the edge of poverty, stratifying households according to their primary source of income, and identifying those that are specialized (95 percent or more of their income) in agriculture enterprises, non-agriculture enterprises, wage/salary labour, and transfers. Taylor^[171] reports a microeconomy-wide modelling exercise based on village models. It is argued that this combines the advantages of micro models focusing on individuals, households, and firms, with economy-wide models highlighting the economic linkages among economic actors that have traditionally been implemented at an aggregate (national or multinational) level. Micro economy-wide models explicitly take into account the market structures that govern economic interactions and make it possible to include linkages among households into an analysis of impacts of globalization and migration on migrant-source economies. Both of these approaches fall into Reimer’s micro-macro category of approach.

OECD^[172] attempts to link the liberalization of OECD agricultural domestic and trade policy to a series of indicators of food security in developing countries using the AGLINK model^[173]. AGLINK was expanded using parameters governing price transmission and the responses of supply and demand for 115 countries, derived from the FAO’s World Food Model. The results of the analyses vary depending on the characteristics of the country in question, but the ranges of change in their food security situation due to an increase in market access or a reduction in export subsidies on the part of OECD members are reported to be slight. The OECD explain this finding by the fact that OECD trade reform has only modest impact on world prices, particularly those world crop product prices that are most relevant in the context of food security; and that the parameters derived from the World Food Model indicate that there are weak links between world prices and local prices and weak responses of domestic agents to those prices. In addition, since the analysis is restricted to the aggregate level, the results give national level indicators of food security; the food security of selected individuals or groups will be improved or damaged to a greater degree than the average results would indicate.

Whilst the majority of quantitative studies that analyse multilateral trade liberalisation use CGE models, the conclusions of such exercises can be challenged on the basis of the assumptions used regarding, for example, the extent of price transmission and supply response. As indicated above, non-modelling approaches can be usefully combined with modelling approaches to improve the model equations.

Approaches to the analysis of unilateral liberalization

Studies which investigate the impacts of reform on a country level basis tend to use a variety of approaches. Sahn et al.^[174] report conclusions from a ten-country study attempting to link changes in policy types (trade and exchange rate, fiscal and agricultural policies) to economic impacts. The studies use a range of descriptive data analysis and multimarket and CGE approaches to model the impact and attempts to draw conclusion across countries. Krueger et al.^[175] summarize the results of an eighteen-country study with the aim of providing estimates of the degree of price discrimination against agriculture and to determine how this affected variables such as foreign exchange earnings, agricultural output and income distribution^[176].

Non-modelling based approaches may range from studies on price transmission to those concerned with determining producer response to changing incentives. Price transmission studies are numerous, as for example reviewed by Prakash^[177] or Baffes and Ajwad^[178]. In addition Balcombe and Morrison^[179] provide a critique of approaches commonly used.

The analysis of the evolution of relative prices forms the basis of a number of commodity based studies. Townsend^[180] documents the extent of reform by developing a typology for comparing the fiscal, monetary, exchange rate and overall macroeconomic policy stance of African countries, in order to aid the comparison of the efficacy of reforms across countries. He also provides a comprehensive review of price and related policy in SSA economies. Akiyama et al.^[181] detail a series of studies of the political economy and institutional aspects of commodity market reform in cocoa, coffee, sugar, cotton and cereal to derive lessons as to how sectoral reform can be implemented.

Some of the more subtle interpretations derive from review based studies which are less constrained by quantitative data availability. Although these studies (with one notable exception reported below) do not have as their main objective the assessment of the impact of reform on food security, they do reveal important observations about the component parts of the relationship.

Kherallah et al.^[182] for example, discusses the extent of market reforms in both food and export crop sectors across a range of African countries, demonstrating that reforms were not fully implemented in most countries and that policy reversal was observed in a number of cases. Mellor^[183] uses descriptions and analyses of agricultural development in several countries (Chinese Province of Taiwan, Punjab, Philippines, Thailand, Costa Rica, Colombia and Kenya) to examine the factors behind success in agriculture and to consider the conditions necessary for such success to contribute to broader economic growth and poverty reduction. Similarly, Dorward and Morrison^[184] examine a set of countries (Belize, Benin, Chad, China, Ecuador, Egypt, Ghana, Peru and Viet Nam) that had increases in labour productivity in the agricultural sector during the 1990s, to identify broad measures and strategies that may be supportive of agricultural development. Based on commodity and country studies, (cocoa in Cameroon and Nigeria; coffee in Cameroon, Ethiopia and the United Republic of Tanzania; coffee and cotton in Uganda, and cotton in Mali, the United Republic of Tanzania and Zambia), Shepherd and Farolfi^[185] review approaches to and experiences with export crop liberalization in Africa to discuss ways in which specific problems (most notably, input supply and quality control)might be overcome.

Notable for its focus on food security, is a cross country study in eastern and southern Africa conducted by Michigan State University^[186]. Impacts on farmers of border measures are examined by Jayne et al.^[187], who conclude that “dealing with the agriculture sector as if farmers are a homogenous group with similar characteristics is misleading”. They reach this conclusion on the basis that in Kenya maize accounts for only 14 percent of household income on average (including consumption) and does not exceed 25 percent even in maize bread basket areas, and that small scale farmers derive 25 to 75 percent of their income from non-farm sources.

Finally, it is not only quantitative, data based studies that reveal interesting observations as to the impact of reforms. A recent publication by SAPRIN^[188] summarizes the results of a nine-country study (covering Ecuador, El Salvador, Mexico, Bangladesh, the Philippines, Ghana, Mali, Uganda, Zimbabwe and Hungary) which investigates the impact of economic policy reform in a participatory manner. In documenting the impact of agricultural reforms, the report claims that there is no clear conclusion, with some countries increasing production levels and others recording a decrease.

11.3 Evidence from experience

Chapters 12 to 15 document evidence of the impact of reforms. This section highlights a number of similarities and differences in the experiences described in these Chapters, first by documenting changes in agricultural performance and related indicators across the regions, and then by noting broad patterns of reform that may be associated with these changes in Africa, Asia and Latin America. Finally, a number of contrasting factors from the review of experience in the Transition economies are described.

Trends in agricultural performance^[189]

Table 11.1 compares the performance of the agricultural sector in middle- and low-income countries in different continents over the last three decades. Taking a broad view across the continents, the picture is of growth in agricultural productivity increasing over the first half of this period and then dropping back somewhat. The lower growth was not initially sufficient to keep up with national population growth, and hence agricultural value added per capita fell at first, before higher growth began to overtake population growth later in the period. Growth in productivity of agricultural labour lies between absolute and per capita growth as the agricultural population increases over the period, but increases at a slower rate than total population as labour moves out of agriculture within rural areas, and migrates to urban areas.

The East Asia & Pacific and Middle East & North Africa regions show a broadly similar pattern of agricultural growth advancing well ahead of population growth, peaking in the 1980s, but maintaining continuing increases in labour productivity in agriculture. South Asia shows continuing increases in growth over the period, again well ahead of population growth and with continuing increases in labour productivity in agriculture. The Latin America and Caribbean region experienced lower agricultural growth after the 1970s but as this was offset by a declining rural population, again there is evidence of increasing agricultural labour productivity. In three of these regions growth in agriculture has been accompanied by a dramatic decline in agriculture’s share of the GDP from 1970 to 1998- by more than 35 percent. The Middle East and North Africa is an exception to this, as agriculture marginally increased its share of the economy: this is due in part to a massive increase in land under irrigation (see table 11.2).

Table 11.1 Agriculture sector performance by income level and region, 1965 - 1998

Source: World Development Indicators, 2000; FAOSTAT.

Table 11.2 Production and productivity changes by income level and region, 1979/81 to 1995/97* (percent change)

* 1996/98 for some variables

Source: World Development Indicators, 2000

The pattern of agricultural change in sub-Saharan Africa has been quite different, with very low rates of growth in the 1970s, followed by increases in the 1980s and 1990s. It appears that per capita growth has been very low or negative over much of the period and that therefore sub-Saharan Africa is the only region with agriculture growing at a rate below overall population growth from 1965 to1998, and at a lower rate than growth in the agricultural labour force from 1980 to1998^[190]. The general picture of low or negative per capita growth in agriculture in much of sub-Saharan Africa over the last 30 years is supported by the high incidence and severity of rural poverty compared with other regions, widespread reports of agricultural stagnation and reductions in both fertilizer use and yields.

Table 11.2 suggests that sub-Saharan Africa is achieving its agricultural growth largely through a different process from that found in other regions. Whereas the East Asia and Pacific region has maintained the area cultivated per capita and South Asia has suffered a large reduction in this respect, sub-Saharan Africa has increased its area under cereals dramatically at the expense of other crops, Sub-Saharan Africa’s increased cereal area is accompanied by a slight fall in overall fertilizer consumption, a larger fall in the rate of fertilizer use, and only a small rise in cereal yields. The area of irrigated land also shows only a small percentage rise, and although this is similar to the percentage increase in irrigated land in the East Asia and Pacific region, sub-Saharan Africa’s increase is from a low base (only 4 percent of crop land being irrigated, compared with 36 percent in the East Asia and Pacific region). As a result, whereas other regions have achieved 80 percent or more of their increased cereal production from yield increases, in sub-Saharan more than 70 percent of increased cereal production is from area increases.

Extent and impact of reform

The changes in agricultural performance summarized above occurred during a period of often substantial economic reform. Although countries in all of the regions undertook reform programmes, there were significant differences in the drivers of reform, the design of reform programmes, and in the extent to which they were implemented.

The region where there is perhaps most debate as to the impact of economic reform on the agriculture sector is Africa. Most sub-Saharan African countries initiated market liberalization in the 1980s as part of structural adjustment programmes. However, Govereh and Jayne suggest that many governments remain unconvinced about fundamental elements of the reforms. There is debate in the literature as to whether it is government intransigence over implementation, or inappropriately designed programmes that have resulted in a poor record of reform and weak associated agricultural performance. In contrast to the discussion in Chapters 6 and 8, where the poor record of reform was explained in terms of the inadequate attention of the orthodox approach to the institutional foundations of market and non-market mechanisms and the degree of market failure pervading the sector, Chapter 12 sets out an alternative viewpoint: that liberalization, rather than being inappropriately designed and prescribed, has not been implemented fully, and that the impact cannot therefore be properly measured.

In developing their argument, Govereh and Jayne provide evidence that countries that are implementing reform are performing no worse than those implementing de jure, or partial, liberalization. Using this evidence, the authors argue for a continuation of the reform process of economic liberalization and market integration. However, in line with the discussion in Chapters 6 and 8, the authors do premise their argument by questioning whether African countries should continue to open their markets to external trade in the face of continued high levels of OECD protectionism.

In setting out their evidence, the authors consider reform at domestic, intraregional and extra-regional levels of agricultural markets. Considering domestic market reform, the authors develop the idea of the conflicting goals of maintaining food prices at a level that is profitable for domestic producers and affordable by consumers. These goals, they suggest, were achieved via controlled marketing systems, which as a result of their reliance on state support, were financially unsustainable. Core policy changes aimed at rectifying this problem involved the removal of barriers to private sector participation in marketing, the privatization of State Trading Enterprises and the abolition of monopolies, in association with the deregulation of prices and the elimination of taxes and subsidies on food products.

The authors regard such changes as necessary steps in improving efficiency within the sector. However, they suggest that the extent of reform has varied widely across Africa. Countries are categorized into those that have been committed to the implementation of reform, for example, Mozambique, Uganda, Mali and Ghana, including others that have been through temporary reversals, such as the United Republic of Tanzania. A second category includes those countries that have resisted reform, for example Zimbabwe in the maize sector. Countries that have undergone de jure liberalization but still have de facto state control of marketing form a third category.

It is this aspect of the maintenance of state control over key activities in the marketing chain that the authors find problematic, suggesting that private sector participation, for example in the Malawian coffee sector, is being stifled. Whilst Chapter 12 acknowledges that it is problematic to draw definitive conclusions of the impact of liberalization of domestic markets, and that the development of credit markets in particular remain a major obstacle, they contend that this is reflective of the false premise of liberalization rather than its false promise. It should be noted that this analysis differs from that provided by Kydd in Chapter 8, which suggests that the state may still have an important role to play in the sector, particularly where agriculture continues to have a potentially important place in wider economic development and poverty reduction.

Turning to intraregional and extra-regional trade liberalization, the authors recognize the growth, and re-emergence, of a number of RTAs, which will allow freer movement and increases in efficiency. It is worth noting that RTAs can potentially increase the size of the domestic market, allowing some protection of sectors whilst they respond to a larger and perhaps less volatile demand, in preparation for more general competition on the global market.

Jones and Govereh also note that the number of countries with open trade regimes has increased from 7 in the early 1980s to 25 in the 1990s. Within this context, the authors raise the issue of exclusion of small scale producers (see also Chapters 9 and 10), suggesting that only through productivity growth and reducing trading costs will these producers be able to participate successfully. Additionally, the point that further opening domestic markets in the face of OECD protectionism is problematic is acknowledged. Indeed, with these points in mind, it is perhaps unsurprising that there is still wide difference of opinion in the literature as to whether African countries are ready for further liberalization of their agriculture and trade policy.

The discussion in the previous section suggests that Asia has been more successful than elsewhere in terms of achieving increased rates of agricultural growth, albeit with variation across countries within the region. In Chapter 13, Dorosh concludes that food availability at the national level is no longer a binding constraint for food security in most countries in most years, but that access to food by some groups of individuals is still a major problem. In summarizing the broad approach to reform, Dorosh suggests that governments have been influenced by the risks associated with a greater reliance on international trade, particularly at earlier stages of development, and hence there remains a perceived need for public intervention in the region.

On the whole, countries within the region have been under less pressure of the conditionality of adjustment loans than either African or Latin American countries. Policy has therefore been influenced to a greater extent by a history of intervention to stabilize food prices or to operate public food distribution programmes and whilst reforms have reduced their scope, STEs still play a significant role. Dorosh also identifies long-term investment in infrastructure, education and agricultural research continuing at a time when rapid labour intensive growth in the non-agriculture sectors allowed the release of surplus agricultural labour.

Latin America differs from Africa and Asia in a number of respects, which are detailed in Chapter 14. Amongst these, agriculture is, in general, less significant for Latin American countries, both in terms of employment and in its contribution to GDP. Valdés and Foster suggest that as a result, it is important to account for broader changes within the economy when determining the impact on levels of poverty and food insecurity. It is recognized that Latin America is heterogeneous in terms of its net trade position, which in association with different approaches to liberalization, makes it difficult to generalize findings across the region. Despite this difficulty, the authors do state that the primary objective of the trade liberalization programmes was to reverse the negative consequences of protectionism, in particular the anti-export bias, but that failures to reform macroeconomic policies and poor progress in the implementation of deregulation and privatization often negated any potential benefits.

In assessing the impacts of reform on agriculture sector performance, Valdés and Foster distinguish between the production of exports, import competing products and non tradables. They note that while the producers of exportables and labour employed in the labour intensive export sector often gained, producers of import substitutes generally lost. The former were often larger scale commercial producers. Less clear was the impact on producers of non tradables, which are by definition, not directly affected. The early stages of reform were however associated with an unfavourable macroeconomic environment, which resulted in declining farm profitability, again negating possible improvements in agricultural performance.

Translating their findings to the investigation of changes in food security status, the authors stress that food supplies are not the main determinant of food security in Latin America. Indeed, policy that has been aimed at improvements in incomes, health and sanitation, in conjunction with targeted nutritional programmes, have been much more important. They note, however, that trade liberalization in the agriculture sector, by lowering consumer prices, has in general been consistent with these policies in helping to reduce levels of food insecurity.

The final chapter of this part of the publication provides an interesting contrast to the three regional based chapters. Swinnen and Beerlandt review the impact of reforms during the period of transition from centrally planned to a more market driven economy on agricultural performance. To assist in drawing out a range of important determinants of impact, experience from countries in central and eastern Europe and the former USSR is contrasted with experience from China, which has undergone a similar process of transition but under rather more gradual and controlled circumstances.

This contrast allows the authors to highlight a number of factors that might explain why the response in terms of agricultural performance was diverse across the countries, both in terms of gross agricultural output and changes in labour productivity. The authors surmise that the initial level of development, both in terms of the state of institutions, infrastructure and social policy, and in terms of GDP per capita, were important determinants of the direction and magnitude of change. Additionally, reform strategies differed quite widely in terms of both price policy, land reform and privatization. Recent advances in the agriculture sectors of the more advanced economies in the region has been stimulated by rapid changes in the levels of labour migration, capital inflows and openness to international trade. The changes in agricultural performance summarized above occurred during a period of often substantive economic reform. Although countries in all of the regions undertook reform programmes, there were significant differences in the drivers of reform, the design of reform programmes, and in the extent to which they were implemented.

The region where there is perhaps most debate as to the impact of economic reform on the agriculture sector is Africa. Most sub-Saharan African countries initiated market liberalization in the 1980s as part of structural adjustment programmes. However, Govereh and Jayne suggest that many governments remain unconvinced about fundamental elements of the reforms. There is debate in the literature as to whether it is government intransigence over implementation, or inappropriately designed programmes that have resulted in a poor record of reform and weak associated agricultural performance. In contrast to the discussion in Chapters 6 and 8, where the poor record of reform was explained in terms of the inadequate attention of the orthodox approach to the institutional foundations of market and non-market mechanisms and the degree of market failure pervading the sector, Chapter 12 sets out an alternative viewpoint: that liberalization, rather than being inappropriately designed and prescribed, has not been implemented fully, and that the impact cannot therefore be properly measured.

In developing their argument, Govereh and Jayne provide evidence that countries that are implementing reform are performing no worse than those implementing de jure, or partial, liberalization. Using this evidence, the authors argue for a continuation of the reform process of economic liberalization and market integration. However, in line with the discussion in Chapters 6 and 8, the authors do premise their argument by questioning whether African countries should continue to open their markets to external trade in the face of continued high levels of OECD protectionism.

In setting out their evidence, the authors consider reform at domestic, intraregional and extra-regional levels of agricultural markets. Considering domestic market reform, the authors develop the idea of the conflicting goals of maintaining food prices at a level that is profitable for domestic producers and affordable by consumers. These goals, they suggest, were achieved via controlled marketing systems, which as a result of their reliance on state support, were financially unsustainable. Core policy changes aimed at rectifying this problem involved the removal of barriers to private sector participation in marketing, the privatization of State Trading Enterprises and the abolition of monopolies, in association with the deregulation of prices and the elimination of taxes and subsidies on food products.

The authors regard such changes as necessary steps in improving efficiency within the sector. However, they suggest that the extent of reform has varied widely across Africa. Countries are categorized into those that have been committed to the implementation of reform, for example, Mozambique, Uganda, Mali and Ghana, including others that have been through temporary reversals, such as the United Republic of Tanzania. A second category includes those countries that have resisted reform, for example Zimbabwe in the maize sector. Countries that have undergone de jure liberalization but still have de facto state control of marketing form a third category.

It is this aspect of the maintenance of state control over key activities in the marketing chain that the authors find problematic, suggesting that private sector participation, for example in the Malawian coffee sector, is being stifled. Whilst Chapter 12 acknowledges that it is problematic to draw definitive conclusions of the impact of liberalization of domestic markets, and that the development of credit markets in particular remain a major obstacle, they contend that this is reflective of the false premise of liberalization rather than its false promise. It should be noted that this analysis differs from that provided by Kydd in Chapter 8, which suggests that the state may still have an important role to play in the sector, particularly where agriculture continues to have a potentially important place in wider economic development and poverty reduction.

Turning to intraregional and extra-regional trade liberalization, the authors recognize the growth, and re-emergence, of a number of RTAs, which will allow freer movement and increases in efficiency. It is worth noting that RTAs can potentially increase the size of the domestic market, allowing some protection of sectors whilst they respond to a larger and perhaps less volatile demand, in preparation for more general competition on the global market.

Jones and Govereh also note that the number of countries with open trade regimes has increased from 7 in the early 1980s to 25 in the 1990s. Within this context, the authors raise the issue of exclusion of small scale producers (see also Chapters 9 and 10), suggesting that only through productivity growth and reducing trading costs will these producers be able to participate successfully. Additionally, the point that further opening domestic markets in the face of OECD protectionism is problematic is acknowledged. Indeed, with these points in mind, it is perhaps unsurprising that there is still wide difference of opinion in the literature as to whether African countries are ready for further liberalization of their agriculture and trade policy.

The discussion in the previous section suggests that Asia has been more successful than elsewhere in terms of achieving increased rates of agricultural growth, albeit with variation across countries within the region. In Chapter 13, Dorosh concludes that food availability at the national level is no longer a binding constraint for food security in most countries in most years, but that access to food by some groups of individuals is still a major problem. In summarizing the broad approach to reform, Dorosh suggests that governments have been influenced by the risks associated with a greater reliance on international trade, particularly at earlier stages of development, and hence there remains a perceived need for public intervention in the region.

On the whole, countries within the region have been under less pressure of the conditionality of adjustment loans than either African or Latin American countries. Policy has therefore been influenced to a greater extent by a history of intervention to stabilize food prices or to operate public food distribution programmes and whilst reforms have reduced their scope, STEs still play a significant role. Dorosh also identifies long-term investment in infrastructure, education and agricultural research continuing at a time when rapid labour intensive growth in the non-agriculture sectors allowed the release of surplus agricultural labour.

Latin America differs from Africa and Asia in a number of respects, which are detailed in Chapter 14. Amongst these, agriculture is, in general, less significant for Latin American countries, both in terms of employment and in its contribution to GDP. Valdés and Foster suggest that as a result, it is important to account for broader changes within the economy when determining the impact on levels of poverty and food insecurity. It is recognized that Latin America is heterogeneous in terms of its net trade position, which in association with different approaches to liberalization, makes it difficult to generalize findings across the region. Despite this difficulty, the authors do state that the primary objective of the trade liberalization programmes was to reverse the negative consequences of protectionism, in particular the anti-export bias, but that failures to reform macroeconomic policies and poor progress in the implementation of deregulation and privatization often negated any potential benefits.

In assessing the impacts of reform on agriculture sector performance, Valdés and Foster distinguish between the production of exports, import competing products and non tradables. They note that while the producers of exportables and labour employed in the labour intensive export sector often gained, producers of import substitutes generally lost. The former were often larger scale commercial producers. Less clear was the impact on producers of non tradables, which are by definition, not directly affected. The early stages of reform were however associated with an unfavourable macroeconomic environment, which resulted in declining farm profitability, again negating possible improvements in agricultural performance.

Translating their findings to the investigation of changes in food security status, the authors stress that food supplies are not the main determinant of food security in Latin America. Indeed, policy that has been aimed at improvements in incomes, health and sanitation, in conjunction with targeted nutritional programmes, have been much more important. They note, however, that trade liberalization in the agriculture sector, by lowering consumer prices, has in general been consistent with these policies in helping to reduce levels of food insecurity.

The final chapter of this part of the publication provides an interesting contrast to the three regional based chapters. Swinnen and Beerlandt review the impact of reforms during the period of transition from centrally planned to a more market driven economy on agricultural performance. To assist in drawing out a range of important determinants of impact, experience from countries in central and eastern Europe and the former USSR is contrasted with experience from China, which has undergone a similar process of transition but under rather more gradual and controlled circumstances.

This contrast allows the authors to highlight a number of factors that might explain why the response in terms of agricultural performance was diverse across the countries, both in terms of gross agricultural output and changes in labour productivity. The authors surmise that the initial level of development, both in terms of the state of institutions, infrastructure and social policy, and in terms of GDP per capita, were important determinants of the direction and magnitude of change. Additionally, reform strategies differed quite widely in terms of both price policy, land reform and privatization. Recent advances in the agriculture sectors of the more advanced economies in the region has been stimulated by rapid changes in the levels of labour migration, capital inflows and openness to international trade.

Some lessons from regional comparisons

The degree of success has varied widely both across and within regions. Much of the failure has been attributed not so much to the set of policy reforms and associated instruments prescribed, but to both the environment (covering aspects ranging from macroeconomic, to institutional development, to agro-climatic) in which they have been prescribed, and the willingness of decision-makers to follow them through.

Pre-reform conditions appear to have a major determining effect on the success of reforms. This point comes out strongly in the section reviewing reforms in the Transition Economies, but flags an important point that policy-makers cannot implement blueprint prescriptions and expect similar degrees of success.

The various regions have therefore differed in their ability to adopt new agricultural technologies to counter the negative effects of rising population sizes and falling prices. Some regions have been successful, with the development of Green Revolution technologies using irrigation, new varieties and chemical inputs to boost rice and wheat productivity dramatically. In many Asian countries, growth has been supported by supportive macroeconomic policies and investment in institutions, infrastructure and services^[191]. There have also been new technological developments, diversification, area expansion and productivity increases in cash and export crops in Latin America and in Asia. The agrarian structures and urban biased macroeconomic policies in Latin America were however not as conducive to broad based agricultural growth as in many South-East Asian countries. South Asia has been slower to take advantage of Green Revolution technologies, partly because in large areas the technologies are not appropriate. Sub-Saharan Africa has suffered from a variety of problems, with initial poor resource endowments compounded by macroeconomic mismanagement discriminating against agriculture, parastatal marketing boards that were often inefficient and ineffective in providing services to farmers, landlocked countries with poor communications infrastructure, and crops and agro-ecological conditions unsuitable to the Green Revolution technologies.

Finally, within the agriculture sectors of individual countries, there are winners and losers from the reforms, and in many cases the resource poor have fallen into the loser category, particularly when excluded from participation in the more dynamic subsectors of agriculture.

From the reviews in Chapters 12 to 15, a number of lessons for further research emerge, which are considered further in Part IV of this publication.