The Effect of Protection and Exchange Rate Policies on Agricultural Trade: Implications for Argentina, Brazil, and Mexico
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The impacts of reducing both agricultural and nonagricultural protection on the agricultural sector are assessed with emphasis placed on Argentina, Brazil, and Mexico. By modeling simultaneously all goods sectors of the economy in a multi-country framework, we evaluate the importance of (1) the relative rates of protection between sectors and (2) exchange rate adjustments
that follow trade liberalization in a world of floating rates. We find substantial improvements in net agricultural trade for Argentina and Brazil, particularly following a multilateral trade and exchange rate liberalization. Additionally, the value of gross domestic product improves for all three
countries following multilateral liberalization suggesting that these
countries experience gains in standard of living from lower world protection.