The limitations of markets

Abstract

Influential multilateral agencies and economists have for long been urging laissez-faire in agriculture that has met with limited success even in the rich countries. This is despite commitments under the WTO. Worse, many poor countries with great agricultural potential have been coaxed to adopt near free trade in agriculture with disastrous results, especially for the poor in these economies. There are fundamental problems in achieving global (or even national) optimality through world trade in agriculture given the immovability of land. What makes matters difficult is that poor countries start their transformation process with much of their population engaged in agriculture, imposing special requirements on farming. Incomes have to rise in agriculture to overcome poverty and to constitute rising domestic demand for modern manufactures and, therefore, the infant industry argument holds with additional force