Making agricultural trade reform work for the poor

This paper brings together what is known about the link between agricultural trade reform and poverty alleviation, and examines how developing countries can successfully manage to open their economies while reducing poverty. It highlights the channels that link agricultural growth, rural development and poverty alleviation with trade. Discussing the potential welfare impacts of policy reform and examining the recent trends of open trade in developing countries, the article concludes that trade leads to growth, and that economic growth is essential to ending poverty.The authors reinforce the need to pursue trade reform with a pro-poor strategy. Other than that, the evidence is consistent and overwhelming: reducing distortions in agriculture, increasing market access, and at the same time creating a domestic policy environment that supports agricultural and rural areas will increase economic growth and alleviate poverty. The key statement made here is that open trade is a key determinant of economic growth, and economic growth is the only path to poverty alleviation.However, when policy-makers consider trade and accommodating reforms, ten useful questions should be asked. Some of these are:will the effects of changed border prices be passed through the economy? If not, the effects (positive or negative) on poverty will be mutedis reform likely to destroy or create markets? Will it allow poor consumers to buy or sell new goods?are reforms likely to affect different household members, such as women and children, differently?will spillovers be concentrated on areas/activities that are relevant to the poor?what factors, such as land, labour, and capital, are used in what sectors? How responsive is the supply of those factors to changes in prices? How flexible is the market?will reforms cause major shocks for certain regions within the country?The authors emphasise that trade reform, in itself, does not exacerbate poverty in developing countries. Instead, the failure to alleviate poverty lies in the underlying economic structures, adverse domestic policies, and the lack of strong flanking measures in developing countries. To ensure that trade reform is pro-poor, the key is not to seek additional exemptions from trade disciplines for developing countries, but to ensure that the World Trade Organization agreements are strong and effective in disciplining subsidies and reducing barriers to trade by all countries.