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Agricultural Comparative Advantage and Government Policy Interventions

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  • E. Wesley F. Peterson
  • Siva Rama Krishna Valluru

Abstract

International trade patterns are often explained by comparative advantage which is frequently thought to depend on variations in national factor endowments. Government intervention in agricultural markets may also have an impact on trade patterns. This study explores the relation between factor endowments and agricultural trade patterns and examines the impact of agricultural and environmental policies on trade flows. Measures of national endowments of capital, labour, land and energy reserves are computed for a sample of 40 countries and used to estimate Heckscher‐Ohlin‐Vanek equations with net trade in several agricultural commodities as the dependant variable. Variables measuring agricultural policy and environmental regulations are added to the equations and tested for significance. The variables representing government intervention do not contribute to the explanation of trade patterns while national factor endowments do account for much of the variation in trade patterns of grains, oilseeds, cotton, and, to a lesser extent, meat products and an aggregate of all agricultural goods. Commodities such as sugar, tropical products and fruits and vegetables do not appear to be well explained by factor endowments.

Suggested Citation

  • E. Wesley F. Peterson & Siva Rama Krishna Valluru, 2000. "Agricultural Comparative Advantage and Government Policy Interventions," Journal of Agricultural Economics, Wiley Blackwell, vol. 51(3), pages 371-387, September.
    • Handle: RePEc:bla:jageco:v:51:y:2000:i:3:p:371-387
    DOI: 10.1111/j.1477-9552.2000.tb01237.x
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    References listed on IDEAS

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    2. Narayan, Seema & Bhattacharya, Poulomi, 2019. "Relative export competitiveness of agricultural commodities and its determinants: Some evidence from India," World Development, Elsevier, vol. 117(C), pages 29-47.
    3. Blank, Steven C., 2002. "Is American Agriculture Near The End Of Its "Life Cycle"?," 2002 Annual Meeting, July 28-31, 2002, Long Beach, California 36580, Western Agricultural Economics Association.
    4. Sarker, Rakhal, 2018. "Trade Expansion, International Competitiveness and the Pursuit of Export Diversification in Bangladesh," Bangladesh Development Studies, Bangladesh Institute of Development Studies (BIDS), vol. 41(02), pages 1-25, June.
    5. Imre Ferto & Lionel J. Hubbard, 2002. "Revealed Comparative Advantage and Competitiveness in Hungarian Agri-Food Sectors Technology Foresight in Hungary," CERS-IE WORKING PAPERS 0208, Institute of Economics, Centre for Economic and Regional Studies.
    6. Colin A. Carter & Shon M. Ferguson, 2019. "Deregulation and regional specialization: Evidence from Canadian agriculture," Canadian Journal of Economics, Canadian Economics Association, vol. 52(4), pages 1497-1522, November.
    7. Fertő, Imre & Hubbard, Lionel J., 2001. "Versenyképesség és komparatív előnyök a magyar mezőgazdaságban [Competitiveness and comparative advantage in Hungarian agriculture]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(1), pages 31-43.
    8. Sarker, Rakhal & Ratnesena, Shashini, 2014. "Revealed Comparative Advantage and Half-A-Century Competitiveness of Canadian Agriculture: A Case Study of Wheat, Beef and Pork Sectors," Working Papers 165675, Canadian Agricultural Trade Policy Research Network.
    9. Imre Ferto & Lionel J. Hubbard, 2001. "Competitiveness and comparative advantage in Hungarian agriculture," CERS-IE WORKING PAPERS 0102, Institute of Economics, Centre for Economic and Regional Studies.

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