An
increase in world prices of agricultural
commodities has nuanced impacts: good for the nation’s economy
but bad for the poor.
Professor German Calfat, an
expert on the relationship and nature of trade and national development at the
University of Antwerp, shared this conclusion during a seminar-forum organized
by state think tank Philippine Institute for Development Studies.
His presentation was based on
the findings of his research on Poverty
impacts of changes in the price of agricultural commodities: recent evidence
for Argentina (an
ex-ante analysis).
The study found that, in the
experience of Argentina, an increase in world prices of agricultural
commodities have positive macro effects on the Argentinian economy. However, the poorest
and most vulnerable sector of society were negatively affected. The changes in labor
income positively affected only the middle class, in that labor income
increased. But the positive changes weren’t enough to compensate the overall
increase in commodity prices.
Professor Calfat recommended
that, as a countermeasure, Argentina and any country facing a similar situation
should enforce complementary actions to address the distributional impact,
especially on the poor, of raising international commodity prices.
The models used in Professor
Calfat’s study relied on data from individual households. They demonstrated the
relationship between wages, the increase in international prices, and the
respondents’ highest educational level. The study, however, did not include
non-labor income in its models.
Professor Calfat’s conclusions
raise questions on the notion that trade liberalization is good for all. The
study shows that is not always the case.
Professor Calfat encouraged
more studies to be done on the matter. Government measures that anticipate
price changes and the interacting nature of their impacts must be enforced to
protect those most vulnerable to the negative effects.
Philippine researchers and
policymakers can replicate the models used and undertake their own study to
gauge the distributional impact of trade liberalization and its relationship to
poverty.
One relevant area worth
looking into is the rice sector and the effects of the World Trade
Organization’s (WTO) extension of the high duties on imported rice.
The WTO Council for Trade in
Goods approved the Philippines’ waiver request for a special treatment on rice
until 2017. The country sought the extension to give farmers time to enhance
their production capability and adjust to the increasing competing with other
rice-producing countries in the region.
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