Agricultural Policies and International Resource Allocation

The essay will begin by describing the principal features of the common agricultural policy of the European Economic Community and indicating the effects of this policy on the level of agricultural self-sufficiency and on agricultural exports in the Community (Section I). This will be followed by a review of changes over time in average rates of agricultural protection in the EEC, Japan, and the United States (Section II). Information will further be provided on the welfare cost of industrial country agricultural protection (Section III) and on the possible effects of the removal of such protection on trade and economic welfare in the industrial and in the developing countries (Section IV). The essay will next consider the incentive policies applied by the developing countries and the potential welfare effects of these policies (Section V). Subsequently, the combined effects of agricultural protection in the industrial countries, developing countries, and the European socialist countries will be analyzed (Section VI). In the conclusions, the policy implications of the findings will be drawn.