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A comparative study of national price levels, agricultural prices and exchange rates

World Development
Publication Date
DOI: 10.1016/0305-750x(90)90050-8
  • Agricultural Science


Abstract This paper attempts a comparison of national price levels, agricultural prices and exchange rates across countries and over the years 1975 and 1980 using recently produced results from the United Nations Statistical Office and the Food and Agriculture Organization. This paper suggests that in most developing countries official exchange rates are more overvalued relative to GDP-based purchasing power parities (PPPs) but less overvalued relative to agricultural output-based PPPs. GDP-based PPPs in most developed countries, are, however, closer to official exchange rates. Hence, conventional opinion as to the existence of significantly lower agricultural output prices in most developing countries is not supported by this study. At the same time, protection afforded farmers in terms of higher agricultural output prices is indicated in many developed countries. It is also observed that in Asia agricultural output prices relative to nonagricultural prices have declined over the period 1975–1980, whereas the opposite trend seems to be the case in Africa. No distinct trend differences over the period are evident for the European experience. However, agricultural output prices in Asia, in 1980, were still higher than in Africa. A few policy implications of these observations are discussed briefly at the conclusion of the paper.

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