Forthcoming: World Economy: Global Trade Policy 2005 Agricultural Liberalization and the Least developed Countries: Six Fallacies

Today, agriculture remains the most distorted sector of the world economy. Therefore, agricultural liberalization in the Doha negotiations is rightly the top priority. But the public-policy discourse on the subject remains fogged by a number of fallacies. These fallacies probably originated with the leadership of the World Bank but have now been embraced by the IMF, OECD, Oxfam and the leading academic critics of globalization. The paper identifies six fallacies and offers evidence and analysis to debunk them: (1) Agricultural border protection and subsidies are largely a developedcountry phenomenon. (2) Developed-country agricultural subsidies and protection hurt the poorest developing countries most. (3) Developed-country subsidies and protection hurt the poor, rural households in the poorest countries. (4) Developed-country agricultural protection and subsidies constitute the principal barrier to the development of the poorest developing countries. (5) Agricultural protection reflects double standard and hypocrisy on the part of the developed countries. (6) What the donor countries give with one hand (aid), they take away with the other (farm subsidies). ∗ Professor of Economics and Bhagwati Professor of Indian Political Economy, Columbia University, School of International and Public Affairs, New York, NY 10027. I am grateful to Jagdish Bhagwati for comments on an earlier draft of this paper.