Developing Countries and the Gains from Regionalism: Links between Trade and Farm Policy Reforms in Mexico

13 Pages Posted: 1 Apr 2020

See all articles by Mary E. Burfisher

Mary E. Burfisher

affiliation not provided to SSRN

Sherman Robinson

World Bank

Karen Thierfelder

United States Naval Academy - Department of Economics

Date Written: August 2002

Abstract

We use a multi‐country computable general equilibrium (CGE) model with agricultural policy details to simulate the effects of North American Free Trade Agreement (NAFTA). We find that Mexico gains from NAFTA only when it also removes domestic distortions in agriculture. In that case, agriculture can generate allocative efficiency gains large enough to offset the terms of trade losses that arise because Mexico has higher initial tariffs than its NAFTA partners. When an RTA forces a developing country to reform its domestic distortions that are linked to trade restrictions, it becomes a building block toward multilateralism.

Keywords: agricultural reforms, commercial policies, computable general equilibrium (CGE) model, developing countries, multilateralism, NAFTA, protection, regionalism, F150, O130, O190, O240, Q170, Q180

Suggested Citation

Burfisher, Mary E. and Robinson, Sherman and Thierfelder, Karen, Developing Countries and the Gains from Regionalism: Links between Trade and Farm Policy Reforms in Mexico (August 2002). American Journal of Agricultural Economics, Vol. 84, Issue 3, pp. 736-748, 2002, Available at SSRN: https://ssrn.com/abstract=3565387 or http://dx.doi.org/10.1111/1467-8276.00331

Mary E. Burfisher (Contact Author)

affiliation not provided to SSRN

Sherman Robinson

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Karen Thierfelder

United States Naval Academy - Department of Economics ( email )

589 McNair Road
Annapolis, MD 21402
United States

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