Globalization and International Commodity Trade with Specific Reference to the West African Cocoa Producers

42 Pages Posted: 4 May 2003 Last revised: 1 Oct 2009

See all articles by Christopher L. Gilbert

Christopher L. Gilbert

Vrije Universiteit Amsterdam, School of Business and Economics; Centre for Economic Policy Research (CEPR)

Panos Varangis

World Bank - Agriculture and Rural Development Department

Date Written: May 2003

Abstract

Liberalization of tropical agricultural markets has brought globalization, in the sense that all producers now face world rather than domestic prices. Producer prices have tended to rise as a share of fob prices as intermediation costs and tax has declined. However, in conjunction with inelastic demand, the downward shift of the aggregate supply curve results in lower world prices. Farmers therefore get a higher share of a lower price. Cocoa is the market where these changes have been most pronounced. The incidence of the liberalization benefits in cocoa is largely on developed country consumers at the expense of the governments of the exporting countries and farmers in non-liberalizing (non-African) countries. Farmers in liberalized African markets are broadly neither better nor worse off.

Suggested Citation

Gilbert, Christopher L. and Varangis, Panos, Globalization and International Commodity Trade with Specific Reference to the West African Cocoa Producers (May 2003). NBER Working Paper No. w9668. Available at SSRN: https://ssrn.com/abstract=403621

Christopher L. Gilbert (Contact Author)

Vrije Universiteit Amsterdam, School of Business and Economics ( email )

De Boelelaan 1105
Amsterdam, 1081HV
Netherlands
+31 20 444 6102/6060 (Phone)
+31 20 444 6020 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Panos Varangis

World Bank - Agriculture and Rural Development Department ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

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