Krueger, Schiff, and Valdés Revisited: Agricultural price and trade policy reform in developing countries since 1960

Abstract

A study of distortions to agricultural incentives in 18 developing countries from 1960–84, by Krueger, Schiff, and Valdés (1988; 1991), found that policies in most of those developing countries were directly or indirectly harming their farmers. Since the mid-1980s, there has been a substantial amount of policy reform and opening up of many developing countries. Indicators of that progress have been made available recently by a new study that has compiled estimates for a much larger sample of developing countries, and for as many years as possible since 1955. The new study also covers Europe's transition economies and comparable estimates for high-income countries, thereby covering more than 90% of world agricultural output and employment. This article summarizes the methodology used in the new study, compares a synopsis of the indicators from Krueger, Schiff, and Valdés and the new study for the period to 1984, summarizes the changing extent of price distortions across countries and commodities globally since then, and concludes by evaluating the degree of distortion reduction over the years since 1984 compared with how much still remains, according to the results of a global economy wide model.