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Distortions to Agricultural 47938 DISTORTIONS TO AGRICULTURAL Public Disclosure Authorized INCENTIVES INASIA Editors Kym Anderson • Will Martin Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Distortions to Agricultural Incentives in Asia Distortions to Agricultural Incentives in Asia Kym Anderson and Will Martin, Editors Washington, D.C. © 2009 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org E-mail: [email protected] All rights reserved. 1 2 3 4 12 11 10 09 This volume is a product of the staff of the International Bank for Reconstruction and Development / The World Bank. The findings, interpretations, and conclusions expressed in this volume do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgement on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without per- mission may be a violation of applicable law. The International Bank for Reconstruction and Development / The World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center Inc., 222 Rosewood Drive, Danvers, MA 01923, USA; telephone: 978-750-8400; fax: 978-750-4470; Internet: www.copyright.com. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Pub- lisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2422; e-mail: [email protected]. Cover design: Tomoko Hirata/World Bank. Cover photo: © Tran Thi Hoa/World Bank Photo Library. ISBN: 978-0-8213-7662-1 eISBN: 978-0-8213-7663-8 DOI: 10.1596/978-0-8213-7662-1 Library of Congress Cataloging-in-Publication Data Distortions to agricultural incentives in Asia / edited by Kym Anderson and Will Martin. p. cm. Includes bibliographical references and index. ISBN 978-0-8213-7662-1 — ISBN 978-0-8213-7663-8 (electronic) 1. Agriculture—Economic aspects—Asia. 2. Agriculture and state—Asia. 3. Agriculture—Taxation—Asia. 4. Agricultural subsidies—Asia. I. Anderson, Kym. II. Martin, Will, 1953- HD2056.Z8D57 2008 338.1'85—dc22 2008029534 Dedication To the authors of the country case studies and their assistants, especially for generating the time series of distortion estimates that underpin the chapters, and, in particular, to Yujiro Hayami for his insights and advice during this project and his related and influential work on Asia over several decades. CONTENTS Foreword xvii Acknowledgments xxi Contributors xxiii Abbreviations xxvii Map: The Focus Economies of Asia xxviii PART I INTRODUCTION 1 1 Introduction and Summary 3 Kym Anderson and Will Martin PART II NORTHEAST ASIA 83 2 Republic of Korea and Taiwan, China 85 Masayoshi Honma and Yujiro Hayami 3 China 117 Jikun Huang, Scott Rozelle, Will Martin, and Yu Liu PART III SOUTHEAST ASIA 163 4 Indonesia 165 George Fane and Peter Warr 5 Malaysia 197 Prema-Chandra Athukorala and Wai-Heng Loke 6 The Philippines 223 Cristina David, Ponciano Intal, and Arsenio M. Balisacan vii viii Contents 7 Thailand 255 Peter Warr and Archanun Kohpaiboon 8 Vietnam 281 Prema-Chandra Athukorala, Pham Lan Huong, and Vo Tri Thanh PART IV SOUTH ASIA 303 9 Bangladesh 305 Nazneen Ahmed, Zaid Bakht, Paul A. Dorosh, and Quazi Shahabuddin 10 India 339 Garry Pursell, Ashok Gulati, and Kanupriya Gupta 11 Pakistan 379 Paul A. Dorosh and Abdul Salam 12 Sri Lanka 409 Jayatilleke Bandara and Sisira Jayasuriya Appendix A: Methodology for Measuring Distortions to Agricultural Incentives 441 Kym Anderson, Marianne Kurzweil, Will Martin, Damiano Sandri, and Ernesto Valenzuela Appendix B: Annual Estimates of Asian Distortions to Agricultural Incentives 473 Ernesto Valenzuela, Marianne Kurzweil, Johanna Croser, Signe Nelgen, and Kym Anderson Index 563 Figures 1.1 Index of Real Per Capita GDP, Asia Relative to the United States, 1950–2006 11 1.2 NRAs in Agriculture, Asian Focus Economies, 1980–84 and 2000–04 28 1.3 NRAs, by Product, Asian Focus Economies, 1980–84 and 2000–04 29 1.4 NRAs for Rice, Milk, and Sugar, Asian Focus Economies, 1980–84 and 2000–04 30 1.5 NRAs for Exportable, Import-Competing, and All Agricultural Products, Asian Focus Economies, 1955–2004 33 1.6 NRAs for Agricultural and Nonagricultural Tradables and the RRA, Asian Focus Economies, 1955–2004 51 Contents ix 1.7 RRAs in Agriculture, Asian Focus Economies, 1980–84 and 2000–04 52 1.8 NRAs and RRAs, China and India, 1965–2004 53 1.9 NRAs and RRAs, Africa, Asia, and Latin America, 1965–2004 54 1.10 Income Distribution, Asian Subregions and the World, 2000 55 1.11 Regressions of Real GDP Per Capita and Agricultural NRAs and RRAs, Asian Focus Economies, 1955–2005 58 1.12 Regressions of Real Comparative Advantage and Agricultural NRAs and RRAs, Asian Focus Economies, 1960–2004 59 1.13 NRAs and International Prices, Rice, Asian Focus Economies, 1970–2005 69 1.14 NRAs for Rice, Malaysia, 1960–2004 71 1.15 RRAs and TBIs in Agriculture, Asian Focus Economies, 1980–84 and 2000–04 72 1.16 RRAs and Real Per Capita GDP, India, Japan, and Northeast Asian Focus Economies, 1955–2005 75 1.17 NRAs for China, Japan, and the Republic of Korea and GATT/WTO Accession, 1955–2005 76 2.1 RRAs for Agricultural and Nonagricultural Tradables, Japan, Republic of Korea, and Taiwan, China, 1955–2004 103 2.2 NRAs for Agricultural Products, Republic of Korea and Taiwan, China, 1955–2004 104 2.3 NRAs for Exportable, Import-Competing, and All Agricultural Products, Taiwan, China, 1955–2002 105 2.4 NRAs for Agricultural and Nonagricultural Tradables and the RRA, Republic of Korea and Taiwan, China, 1955–2004 106 2.5 NRAs for Rice, Republic of Korea and Taiwan, China, 1955–2004 107 2.6 RRAs in Agriculture and Relative GDP per Agricultural Worker, Republic of Korea and Taiwan, China, 1955–2004 112 3.1 Agricultural Trade Balance, by Factor Intensity, China, 1985–2002 128 3.2 The Domestic Market for Foreign Currency, China 141 3.3 NRAs for Exportable, Import-Competing, and All Agricultural Products, China, 1981–2004 149 3.4 Average NRAs for Producers of Major Commodities, China, 2000–05 151 3.5 NRA Estimates in Other Studies, by Product, China, 1995–2001 154 3.6 NRAs for Agricultural and Nonagricultural Tradables and the RRA, China, 1981–2004 155 4.1 Border and Domestic Prices of Import-Competing Products Relative to the GDP Deflator, Rice and Urea Fertilizer, Indonesia, 1975–2005 174 4.2 Border and Domestic Prices of Import-Competing Products Relative to the GDP Deflator, Sugar, Indonesia, 1971–2005 177 x Contents 4.3 Border and Domestic Prices of Import-Competing Products Relative to the GDP Deflator, Soybeans, Indonesia, 1970–2005 178 4.4 Border and Domestic Prices of Import-Competing Products Relative to the GDP Deflator, Maize, Indonesia, 1969–2005 179 4.5 Border and Domestic Prices of Export Crops Relative to the GDP Deflator, Indonesia, 1967–2005 181 4.6 NRAs for Exportable, Import-Competing, and All Agricultural Products, Indonesia, 1970–2004 192 4.7 NRAs for Agricultural and Nonagricultural Tradables and the RRA, Indonesia, 1970–2004 194 5.1 Commodity Composition of Agricultural GDP, Malaysia, 1965–2005 200 5.2 NRAs for Exportable, Import-Competing, and All Agricultural Products, Malaysia, 1960–2004 215 5.3 NRAs for Agricultural and Nonagricultural Tradables and the RRA, Malaysia, 1960–2004 217 6.1 Value Shares of the Primary Production of Covered and Noncovered Commodities, the Philippines, 1966–2004 239 6.2 NRAs for Exportable, Import-Competing, and All Agricultural Products, the Philippines, 1962–2004 245 6.3 NRAs for Agricultural and Nonagricultural Tradables and the RRA, the Philippines, 1962–2004 248 7.1 Price Comparisons and NRPs at Wholesale, Rice, Thailand, 1968–2005 262 7.2 Price Comparisons and NRPs at Wholesale, Maize, Thailand, 1968–2005 263 7.3 Price Comparisons and NRPs at Wholesale, Cassava, Thailand, 1969–2004 264 7.4 Price Comparisons and NRPs at Wholesale, Soybeans, Thailand, 1984–2005 265 7.5 Ratios, Consumer Prices to Border Prices and Miller Prices to Grower Prices, Sugar, Thailand, 1968–2005 266 7.6 Price Comparisons and NRPs at Wholesale, Sugar, Thailand, 1968–2005 267 7.7 Price Comparisons and NRPs at Wholesale, Palm Oil, Thailand, 1995–2004 267 7.8 Price Comparisons and NRPs at Wholesale, Rubber, Thailand, 1968–2005 268 7.9 Price Comparisons and NRPs at Wholesale, Urea Fertilizer, Thailand, 1984–2005 269 7.10 NRAs for Agricultural and Nonagricultural Tradables and the RRA, Thailand, 1970–2004 277 8.1 Agriculture, GDP, and Value Added, Vietnam, 1985–2005 284 Contents xi 8.2 Commodity Shares in Agricultural Production, Vietnam, 1991–2002 286 8.3 Volume, Value, and Price Indexes, Agricultural Exports, Vietnam, 1990–2004 288 8.4 Weighted Average Import Duties, Vietnam, 1990–2004 292 8.5 Index, Real Exchange Rate, Vietnam, 1988–2005 294 8.6 NRAs for Agricultural and Nonagricultural Tradables and the RRA, Vietnam, 1986–2004 298 9.1 Commodity Shares in Agricultural Production, Bangladesh,
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