More Agri-Subsidies

From Wayne Wides of Commentary:

The proposal for liberalising global trade in agriculture is in itself indeed a good idea, but its own benefits may be overstated and expecting it to be the single spur for economic growth is foolhardy. Indeed, many campaigners ignore the fact that many poor countries already receive beneficial trade access to first world food markets. A study by free traders Jagdish Bhagwati and Arvind Panagariya also has them concerned about the consequences of such liberalisation for African countries, among others.

In particular they note a paradox: that the expected increase in food prices would benefit the rural poor in poor countries, who would grow more to meet higher prices, but negatively affect the urban poor, who would inadvertantly have to pay more for the same food. That's a recipe for social instability and such governments have been all too aware of this fact by allowing for cheaper food in urban areas.

Slashing subsidies but similarly not tariffs across the board would also mean that Brazil and Argentina would reap most of the benefit of such liberalisation, and not Africa (in fact sub-saharan Africa would potentially lose over $400 million per year). In short piecemeal liberalisation will make Africa worse off while full liberalisation may encourage urban instability even as poor nations would benefit. The benefits of free market economics there would come under attack very quickly if such cons are not addressed promptly and competently. Weak governments are potentially susceptible.

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