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Abstract

This paper investigates the effect of a tariff reduction on the world's grain self-sufficiency which is a main component in defining the food security. We develop a theoretical model in which trade, tariff and supply-demand equations are explicitly included, with the classification of food-importing and exporting countries. Empirical equations are estimated using the system generalized method-of-moments (GMM) approach to control endogeneity problem. Estimation results based on panel data for 150 countries over 17 years show that world grain price and world's self-sufficiency rate(SSR) are positively correlated, but the country level GDP per capita, population, agricultural input price, and prices of substitutes for grain have negative effects on world's SSR. The effects of domestic tariff of food-importing countries on the world’s grain SSR are estimated to be positive. Using the estimated coefficients on the empirical equations, we derived the elasticities of grain SSR with respect to the tariff level of food-importing countries. Those are in the ranges of 0.221-0.387. These results support the argument that tariff reduction has a negative effect on the importer’s food SSR.

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