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Abstract
With the advent of the WTO’s Doha Development Agenda, as well as the Millennium
Development Goals aiming to reduce poverty by 50 percent by 2015, poverty impacts of
trade reforms have attracted increasing attention. This has been particularly true of
agricultural trade reform due to the importance of food in the diets of the poor, relatively
higher protection in agriculture, as well as the heavy concentration of global poverty in
rural areas where agriculture is the main source of income. Yet some in this debate have
argued that, given the extreme volatility in agricultural commodity markets, the
additional price and poverty impacts due to trade liberalization might well be
undetectable. This paper formally tests this “invisibility hypothesis” via stochastic
simulation of a computable general equilibrium framework. The hypothesis test is based
on the comparison of two sets of price and poverty distributions. The first originates
solely from the inherent variability in global staple grains markets, while the second
combines the effects of this inherent variability and trade reform. Results indicate that the
short-run impacts of trade liberalization on poverty are not distinguishable from market
volatility in majority of the fifteen focus countries – suggesting that the poverty impacts
of agricultural trade liberalization may indeed be invisible.