Three essays in agricultural economics : international trade, development and commodity promotion

Abstract

This thesis contains three essays on topics in agricultural economics. Essays one and two share a focus on international trade and economic development, and essays two and three apply dynamic tools to agricultural economic policy issues.Essay one analyses trade-related implications of a developing country's decision to adopt genetically-modified crop technology. A fixed-proportions model is constructed that evaluates the welfare implications of a range of adoption policies and export market responses. The model in this essay illustrates the importance of the prospective adopter formulating a projection of probable export market effects before making an adoption decision and of the role that high transaction costs may play in a developing country's adoption decision. The model also considers the effects of a new policy tool; a check-off style levy on genetically-modified technology in place of a technology-use agreement. A levy could be useful tool in developing countries, which are characterised by high transaction costs. Essay two models the effects of emergency food aid on a recipient country's agricultural industry. This essay formulates a definition of “needed” aid in the context of a food emergency and constructs an optimal control model that solves a path of aid shipments that best meets that need. The effects of a range of food aid paths on recipient-country agricultural production are illustrated through numerical simulations. There are two key results. First, a non-optimal amount of aid can hinder a recipient-country's recovery from an exogenous food shock. Second, an exogenous shock can affect farmer revenue and therefore impact planting decisions. This effect must be considered in aid allocation policies. Essay three uses time-series econometric techniques to develop a demand model that assesses the effectiveness of commodity advertising. This essay describes the importance of considering long-run and dynamic effects in demand systems, especially in the case of closely substitutable commodities. A demand system that tests for and accommodates dynamic and time-series properties is developed and applied to US meat data. The results of this model are compared to a traditional static demand system. The dynamic model produces econometrically and theoretically sound results and generates some more intuitively appealing estimates.