Multilateral trade liberalisation offers developing countries the prospect of increased access to developed country markets. This is expected to give many developing countries the opportunity to increase their agricultural exports and help economic growth and poverty reduction.

Research from the Overseas Development Institute, UK explores and assesses whether the level of access to developed country markets determines developing country agricultural exports and; whether agricultural exports can help in reducing poverty.

The research developed a clear conceptual framework, linking domestic and international trade policies, agricultural exports, and poverty reduction in developing countries. It then did a cross-country statistical analysis showing trends in agricultural exports from developing to developed countries.  Finally, case-study analysis was done of three sectors and countries – Kenya’s fruit and vegetable sector, Bangladesh’s frozen shrimp sector and Ecuador’s cut-flower sector - which achieved a significant increase in exports to developed countries during the 1990s.

Results show that:

• Agricultural exports from developing to developed countries have stagnated over the past two decades, in marked contrast to manufactured exports.
• Nevertheless, some developing countries, achieved significant increases in agricultural exports during the 1990s, particularly in Asia and Latin America.
• Domestic trade policies strongly influence developing countries’ agricultural exports. Increased market access has a positive impact, notably for exports from ACP countries to the EU, and from ATPA and CBI countries to the US. 
• However improved market access has not increased exports from least developed countries. 
• The three export sectors examined benefited some extent from preferential market access to developed country markets but complementary domestic policies were important in increasing export competitiveness.
• Increased exports in all three cases had beneficial macroeconomic effects but had little direct impact on the poorest households, since barriers to participating in each sector are high.
• Redistribution of the gains from increased exports through taxes and transfers was very little: the most significant impact of increased exports on poor households was due to higher agricultural wages and employment opportunities.

Policy implications include:

• Developed country governments need to implement measures complementary to improved market access if the poorest developing countries are to gain significantly from that access.
• Complementary measures should include more aid for investments in improved transport and communications infrastructure, technological upgrading and quality control and so on.
• Developing country governments need to implement measures complementary to export promotion for improving the poverty impact of increased exports.
• Complementary policies could include expanding government spending in social sectors such as social security and welfare, basic health and education, and increasing domestic tax collection to help this expansion. 

Source(s):
‘The Social Impact of Improved Market Access and Export Promotion in Agriculture’, Overseas Development Institute, by Edward Anderson, Francisco Ayala and Kate Bird, November 2005 Full document.
Further details about this research project 'The Social Impact of Improved Market Access' Full document.

Funded by: European Commission and the UK Department for International Development (EC-Prep)

id21 Research Highlight: 20 November 2006

Further Information:
Edward Anderson
Poverty and Public Policy Group
Overseas Development Institute
111 Westminster Bridge Road London SE1 7JD, UK

Tel: +44 (0)20 7922 0300
Fax: +44 (0)20 7922 0399
Contact the contributor: e.anderson@odi.org.uk

ODI, Poverty and Public Policy Group, UK

Other related links:
'Aid for trade: enhancing trade capacity in poor countries'

'Harnessing trade for development: benefiting from market access opportunities'

'Changes in trade policies'

'Lessons from agricultural reform in sub-Saharan Africa'

Eldis Trade Liberalisation and Protection Resources