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Abstract
Impacts of agricultural and nonagricultural trade liberalization on agriculture are assessed in a
multicommodity. multicountiy framework. By modelling simultaneously all goods sectors of the economy, the
importance of (l) relative price changes between sectors and (2) income and exchange rate adjustments that follow
trade liberalization in a world of floating rates are evaluated. Specifically, four cases are compared using a static
world policy simulation (SWOPSIM) model: industrial market ecooomy agricultural Jiberalizatioo, global agricultural
liberalization, all-sector industrial market economy liberalization, and all sector global liberalization. Under all sector
liberalization scenarios, exchange rates are allowed to float for all countries/regions. In all cases, agricultural
corrunodity prices tend to increase, an effect that is more pronounced when currency values adjust but less
pronounced under global relative to industrial market economy liberalization. Three Latin American countries are
modelled individually: Argentina, Brazil, and Mexico. Argentina and Brazil have the most significant advances in
agricultural trade with an all-sector global liberalization. The deterioration of the Mexican agricultural trade balance
is reduced when exchange rates are allowed to vary.