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Agricultural incentives and international competitiveness:Government interventions and exogenous shocks in four East African countries

Authors
Journal
Food Policy
0306-9192
Publisher
Elsevier
Publication Date
Volume
18
Issue
4
Identifiers
DOI: 10.1016/0306-9192(93)90054-f
Disciplines
  • Agricultural Science
  • Communication
  • Economics
  • Political Science

Abstract

Abstract Real agricultural prices depend on international prices, the real exchange rate and sector-specific price interventions. For the case of four East African countries, this article decomposes the evolution of agricultural prices during the 1980s into these three components. Additionally, the article computes the relative agricultural prices that would have prevailed in the absence of sectorspecific and macroeconomic distortions. Results indicate that a strong anti-trade bias within the agricultural sector prevailed: importable products tended to be protected while exportables were disprotected. On the other hand, government interventions and inefficiencies in the marketing process precluded the increases in the real exchange rate that took place during the second half of the 1980s from being fully transmitted into higher agricultural prices. Finally, and depending on the country, the removal of sector-specific and macroeconomic distortions would have caused real agricultural prices to increase by an amount fluctuating between 10% and 68%.

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