2011-2013
Subtheme 2.1: Globalization and Markets (GRP 2)
Centers/ProgramsIFPRI
Target RegionsAsia, CWANA, LAC, SSA
Countries of Planned Research Potential Beneficiary Countries
 
Bangladesh, China, Ethiopia, Indonesia, India, Morocco, Pakistan, Philippines, Senegal
 
Bangladesh, China, Ethiopia, Indonesia, India, Morocco, Pakistan, Philippines, Senegal
CGIAR Priorities
3A - Increasing income from fruit and vegetables
3B - Income increases from livestock
3C - Enhancing income through increased productivity of fisheries and aquaculture
5B - Making international and domestic markets work for the poor
5C - Rural institutions and their governance
Development Activities - Development Activities
Stand-alone Training - Stand-alone Training
Financing Sources
Members: ADB, Australia, European Commission, FAO, Finland, Japan, Switzerland, United States, World Bank

Non Members: Agence Francaise de Development (AFD), Bill and Melinda Gates Foundation, Center for International Research and Economic Modelling, Coffey International Development, HarvestPlus/CP, Hewlett Foundation, Indian Center for Agricultural Research (ICAR), Institut Nationale de la Recherche Agronomique, Institute for Financial Management and Research (IFMR), Landbouw-Economish Instituut, Michigan State University, Others, Overseas Development Institute (ODI), S.E.VEN Fund Inc., University of Illinois, Unres+Other Sources, Weidemann Associates, World Food Program (WFP)
Project Overview and Rationale

The inefficiency of international and domestic markets is traditionally viewed as a key policy constraint faced by the developing world. While there is a widespread consensus that trade liberalization generates gains for all trading partners in the aggregate, its impacts on poverty continues to be a subject of considerable debates, among academics and policymakers, because of the potential adverse effects liberalization can have on rural and urban poverty, employment, and income distribution. These outcomes can have different magnitudes under various types of liberalization, such as multilateral, reciprocal and regional agreements, and preferential schemes and various types of distortions, such as coupled or decoupled domestic support instruments, import tariffs, and policies aimed at supporting the development of biofuels production.

Economic growth, which alleviates poverty, can be bolstered by trade liberalization. However, this process is inhibited by market failures and public interventions in most South Asian and Sub-Saharan Africa countries. These market failures and public interventions can dampen agricultural supply responses and consumers’ growing preferences for quality products.

Given the predominant role of agriculture in the livelihoods of most people in developing countries, especially in South Asia and Sub-Saharan Africa, any strategy for reducing poverty and hunger must include rapid growth in the agricultural sector. However, increased agricultural productivity can depress commodity prices and farmers’ incomes if they are not linked to market opportunities, or if high market transaction costs exist. Poorly functioning markets, weak domestic consumer demand, and lack of export possibilities are major constraints to agricultural growth prospects for many developing countries. The development of biofuels sectors may have adverse consequences on poverty in developing countries. It might have an expansionary effect on the demand for agricultural feedstock needed in the production of biofuels, benefiting the poor in rural areas, but could simultaneously exert an increasing pressure on world agricultural prices at the detrimental of urban poor in net food importing countries.

Goals and Objectives

The overall objective of this research project is to support the adoption of policies for more efficient functioning of the global food, nutrition, and agricultural system so as to support the inclusion of low-income countries and improve food and the nutrition security of poor people. The program emphasizes issues of global agricultural trade negotiations, regional trade, and trade preferences; linkages between domestic policies and globalization; distributional impact of trade liberalization; the impact of developed-country policies on developing-country food security, and pro-poor policies along the entire food chain given the growing importance of consumers and retail industries as food system drivers; the development of a biofuel sectors and its potential implications on developing countries. Policy changes supported by this research are expected to accelerate income growth through increased access to both domestic markets and international trade.


Project Outputs
Output Title
1: Assessment of the contributions of multilateral trade agreements and rules to efficient global food and agricultural markets and benefits for the world’s poor (three years).
Output Description
With regard to outputs 1 and 2 the project will continue to provide the quantitative analysis and analytic capacity building that are necessary for understanding of regional and multilateral trade agreements and the contribution they can make to development and poverty alleviation.

Under output 1, the project will employ a global economic model to analyze the effects on national producer and consumer welfare policy options under the World Trade Organization (WTO) Doha Development Round. In addition, the project will carry out similar analysis of effects of alternative policy options under a WTO agriculture agreement on poverty and the distribution of income within developing countries.

Under this output two new versions of the MIRAGE model of the world economy will be developed. A first one will be a simple version of the model, in order to be more accessible to all researchers. This will be an international public good, freely available to the international community of economic researchers. The second one will add a module that studies the impact of trade liberalization on poverty at the household level.

In addition, a new global database on gender will be developed crossing the GTAP dataset and International Labor Organization resources on employment by Gender. This important development will constitute a corner stone in trade liberalization impact assessment on gender inequalities.
CGIAR Priorities
Countries of Planned Research
Bangladesh, Morocco, Pakistan, Philippines, Senegal
Intended Users
National and international agricultural policymakers and analysts from developing and developed countries, trade negotiators, producer and consumer interest groups concerned with food security, trade and agricultural development, donor organizations, public educators.
Outcome
Results of quantitative simulation models used by policymakers to understand the effects of alternative multilateral trade agreements on the levels and distribution of producer income and consumer well being, and on poverty within countries. Policy options delineated for the development of efficient global agricultural markets that increase real incomes of the poor. Policies implemented that provide appropriate price incentives and promote international trade.
Impact
Growth in rural income, reduction in poverty and malnutrition in rural areas, and improved indicators of food security, sustainable production, and trade opportunities. Reduction of gender inequalities and inclusive trade-led growth. "

Output Target
Year Target Type Target Description
2010
Policy strategies
Analysis completed in a global economic model of the effects on national producer and consumer welfare of policy options under the World Trade Organization (WTO) Doha Development Round.
2010
Policy strategies
Inclusion of gender dimension in the analysis of impacts of multilateral trade agreements through development of a global database to separate male and female employment by sector and country.
2011
Policy strategies
Analysis completed in a global economic model of the effects on poverty and the distribution of income within developing countries of alternative policy options under a WTO agreement on agriculture.

Output Title
2: Assessment and documentation of the regional effects of multilateral trade policies and rules, and of the contributions of regional trade agreements to efficient food and agricultural markets and benefits for the poor (2 years).
Output Description
With regard to outputs 1 and 2 the project will continue to provide the quantitative analysis and analytic capacity building that are necessary for understanding of regional and multilateral trade agreements and the contribution they can make to development and poverty alleviation.

With regard to output 2, the project will analyze the potential impact of a Duty Free Quota Free Access given to African countries by OECD countries. In addition, the project will also study the potential distributional impact of an Economic Partnership Agreement between the European Union and several African countries.

The comparative advantage of GRP 2 research in these fields is that its researchers have been among the architects of the cutting-edge analytical tools such as the MIRAGE model and the MAcMap database which are continually updated with innovative features placing IFPRI’s research at the forefront of the field. In addition the global gender database developed inside the output 1 framework will appear to be a key resource to analyze the gender dimension of regional trade agreements. Focusing on regional and country cases, the global database will be improved relying on national data and household surveys.
CGIAR Priorities
Countries of Planned Research
Bangladesh, China, Ethiopia, Indonesia, India, Philippines
Intended Users
National policymakers and analysts from developing countries, donor organizations.
Outcome
Design of adjustment and support programs to facilitate implementation of regional trade. Models providing in-depth knowledge of the income distributional effects of alternative regional and preferential trade policies among diverse developing countries are used to improve policy decisions to the benefit of poor and vulnerable groups agreement
Impact
Growth in rural income, reduction in poverty and malnutrition in rural areas, and improved indicators of food security, sustainable production, and trade opportunities."

Output Target
Year Target Type Target Description
2010
Policy strategies
Analysis completed of the potential impact of a Duty Free Quota Free Access given to African countries by OECD countries.
2011
Policy strategies
Analysis completed of the potential distributional impact, including its gender dimension, of Regional Trade agreements with a focus on the agreements between Morocco and the EU and the US, and Pakistan and China.

Output Title
3: Assess and document the impacts of increased production and consumption of biofuels on developing countries and poor people in rural areas (2 years).
Output Description
Under output 3, the project has further expanded the MIRAGE model in order to better analyze the impacts of rising biofuels on developing countries. There were three significant aspects on which the project has built upon. The first one was the integration of particular sectors (biofuels) in the MIRAGE model, together with an improved modelling of the energy sector. The second development extended MIRAGE model in order to better represent land use, as a key element of interdependence between biofuels and energy sectors is the demand for this primary factor. The third development expanded MIRAGE to include detailed projections on food demand, domestic support programs, population growth, price of fossil oils in order to evaluate how alternative economic scenarios impact the world demand for agricultural and food products. New methodological aspects will concern the integration of by-products of biofuels like DDGS and soybean cakes. Further research will focus on improving the database on biodiesel and oilseeds for biodiesel and examining various biofuels policy scenarios in order to assess the consequences on developing countries. Last, the CGE analysis is combined with household survey data to assess the consequences of OECD countries policies on poverty and hunger.
CGIAR Priorities
Countries of Planned Research
n/a
Intended Users
National policymakers and analysts from developing countries an developed countries, donor organizations.
Outcome
Policymakers in developing and developed countries, better able to formulate policies that bring about real benefits to developing countries.
Impact
Growth in rural income, reduction in poverty, sustainable production, and trade opportunities."

Output Target
Year Target Type Target Description
2010
Policy strategies
Construction of a “Biofuel” version of the MIRAGE model of the world economy (in collaboration with INRA and CEPII, France)
2011
Practices
Utilization of the MIRAGE-Biofuels model combined with household surveys to assess the effects of the OECD biofuels mandate on poverty.

Note: Financial Tables, Target Regions, CGIAR Priorities and Financing Sources show aggregated data for more than one MTP project and in particular for: - Subtheme 2.1: Globalization and Markets (GRP 2) - Subtheme 2.2: Participation in High-Value Agricultural Markets (GRP 27) - Subtheme 2.3: Institutions and Infrastructure for Market Development (GRP 23)


Allocation of Member, Non-Member Grants and other sources to projects, 2009-2011
in $millions

Project Member Actual
2009
Estimated
2010
Proposal
2011
Project Total
4.879
5.773
5.657
Theme 2: Globalization, Trade and MarketsMemberADB
0.380
0.385
0.000
Australia
0.210
0.136
1.138
European Commission
0.596
0.000
0.000
FAO
0.000
0.025
0.000
Finland
0.000
0.000
0.282
Japan
0.045
0.000
0.000
Switzerland
0.047
0.140
0.000
United States
0.187
0.733
0.822
World Bank
0.127
0.273
0.009
Non MemberAgence Francaise de Development (AFD)
0.000
0.111
0.000
Bill and Melinda Gates Foundation
0.040
0.633
0.000
Center for International Research and Economic Modelling
0.018
0.079
0.000
Coffey International Development
0.010
0.020
0.000
HarvestPlus/CP
0.000
0.118
0.268
Hewlett Foundation
0.494
0.273
0.000
Indian Center for Agricultural Research (ICAR)
0.012
0.128
0.000
Institut Nationale de la Recherche Agronomique
0.120
0.060
0.371
Institute for Financial Management and Research (IFMR)
0.000
0.080
0.104
Landbouw-Economish Instituut
0.055
0.209
0.341
Michigan State University
0.073
0.162
0.124
Others
0.036
0.219
0.224
Overseas Development Institute (ODI)
0.008
0.000
0.000
S.E.VEN Fund Inc.
0.045
0.011
0.000
University of Illinois
0.018
0.000
0.000
Weidemann Associates
0.063
0.000
0.000
World Food Program (WFP)
0.006
0.000
0.000
Unres+Other SourcesUnres+Other Sources
2.289
1.978
1.974


Allocation of Project Costs to CGIAR Priorities, 2009-2013
in $millions

Project Actual
2009
Estimated
2010
Proposal
2011
Plan 1
2012
Plan 2
2013
Priorities
Theme 2: Globalization, Trade and Markets
Project Total
4.879
5.773
5.657
5.883
6.119
3A
0.917
1.085
1.064
1.106
1.150
3B
0.917
1.085
1.063
1.106
1.150
3C
0.459
0.543
0.532
0.553
0.575
5B
1.769
2.094
2.050
2.133
2.219
5C
0.622
0.735
0.721
0.750
0.780
Development Activities
0.049
0.058
0.057
0.059
0.061
Stand-alone Training
0.146
0.173
0.170
0.176
0.184


Project investment by developing Region, 2009-2013
in $millions

Project Target Regions Actual
2009
Estimated
2010
Proposal
2011
Plan 1
2012
Plan 2
2013
Project Total
4.879
5.773
5.657
5.883
6.119
Theme 2: Globalization, Trade and MarketsAsia
2.428
2.948
3.130
3.255
3.386
CWANA
0.479
0.495
0.253
0.264
0.274
LAC
0.528
0.619
0.587
0.610
0.635
SSA
1.444
1.711
1.687
1.754
1.824