Most of the world’s poorest people depend on farming for their livelihood.
Earnings from farming in low-income countries are depressed partly due to a pro-urban
bias in own-country policies, and partly because richer countries (including some
developing countries) favor their farmers with import barriers and subsidies. Both sets of
policies reduce national and global economic growth and add to inequality and poverty in
developing countries. Acknowledgement of that since the 1980s has given rise to greater
pressures for reform, both internal and external. Over the past two decades numerous developing country governments have reduced their sectoral and trade policy distortions, while many high-income countries continue with protectionist policies that harm developing country exports of farm products.
Recent research suggests that the agricultural protectionist policies of highincome
countries reduce welfare in many developing countries. Most of those studies
also suggest that full global liberalization of merchandise trade would raise value added
in agriculture in developing country regions, and that much of the benefit from global
reform would come not just from reform in high-income countries but also from
liberalization among developing countries, including in many cases own-country reform.
These findings raise three key questions that are addressed in turn in this paper:
To what extent have the reforms of the past two decades succeeded in reducing
distortions to agricultural incentives? Do current policy distortions still discriminate
against farmers in low-income countries? And what are the prospects for further reform
in the next decade or so?