The Desirable Form of Openness for Indian Agriculture
Author(s)
Storm, S.
Abstract
How open should a developing country’s agriculture be to the world economy? What are the medium-term effects for growth and income distribution of ‘close’ integration with world agricultural markets through trade liberalization and domestic reform? And what are the implications of the ‘strategic’ integration of agriculture with world markets? Using a dynamic computable general equilibrium model, these questions are addressed for the Indian economy. The simulation results show that the costs of ‘close’ integration are large and unevenly distributed, irrespective of whether the agricultural reform is immediate or gradual. One form of ‘strategic’ integration is operationalised that yields more desirable outcomes in terms of growth and income distribution. The paper also compares the effectiveness of the two policy regimes in coping with an adverse supply shock.
