Agricultural Sector Impacts of Economic Reform in Greater Europe and the Former Soviet Unio

Agricultural Sector Impacts of Economic Reform in Greater Europe and the Former Soviet Unio

Historic economic reforms are under way in Western Europe, Eastern and Central Europe and in the former Soviet Union. Western European governments are committed to reduce the growth of output from their highly protected agricultural sectors and raise domestic demand, thus reducing the region`s net food surplus. Although the pre-reform agricultural sector of the former Soviet Union was also heavily assisted, that assistance was combined with substantial consumption subsidies. The move toward less fiscally burdensome policies in that region, combined with the overall economic slump there, has reduced both food production and consumption. But inexpensive catch-up technical change could bring major improvements in agricultural productivity and a growing net surplus in many staple food products. This paper marshalls evidence for this tendency of the reforms in East and West to have off-setting effects on the region`s net agricultural trade. A disaggregated revision of the Tyers-Anderson model of world food trade is then used to quantify these possible effects, the results suggesting that the overall trend will be toward an increasing net surplus of staple food products across Greater Europe and the former Soviet Union.