The Thai Government introduced a generous price support program for paddy rice in 2011. The policy terminated in mid 2014 with the dismissal of the democratically elected Prime Minister, Ms Yingluck Shinawatra. There is an interest in understanding the welfare effects of the policy given the ongoing civil suit put against the former Prime Minister and the large stocks that remain. This study therefore analyses the welfare effects of various Thai rice policy options using a 10-region, dynamic, stochastic, partial equilibrium model of world rice trade. It finds that while the Thai policy was effective in supporting the incomes of rice producers in the short run, the burden imposed on taxpayers and consumers seems difficult to justify.JEL classifications: Q17, Q18
Trade between developing countries, or South-South trade, has been growing rapidly in recent years following significant reductions in tariff barriers. However, significant barriers remain, and there is currently reluctance among many developing countries to undertake further reductions, instead preferring to focus on opening up access to developed country markets, or to maintain the status quo given that multilateral liberalisation may results in the erosion of preferential access enjoyed by some developing countries. This emphasis on Northern markets represents a missed opportunity for developing countries. To assess this we compare the potential effects of the removal of barriers on South-South trade with the gains from developed country liberalisation and from regional free trade areas within Africa, Asia and Latin America. A general equilibrium model, GTAP, containing information on preferential bilateral tariffs, is used to estimate the impacts. The results indicate that the opening up of Northern markets would provide annual welfare gains to developing countries of $24 billion. However, the removal of South-South barriers has the potential to generate gains 60 per cent larger. By contrast, the potential gains from further regional agreements on a continental basis are limited in Africa and Asia, although scope remains in Latin America. The results imply that giving greater emphasis to removing barriers between as well as within continents could prove a successful Southern survival strategy.
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