TRADE POLICIES AND THEIR IMPACT ON AGRICULTURAL ECONOMICS: EVIDENCE FROM EMERGING MARKETS

Abstract

This paper examines the multifaceted impacts of trade policies on agricultural economics in emerging markets, drawing on recent empirical evidence and modeling advancements. Over the past three decades, global agricultural trade has expanded dramatically to approximately 1.3 trillion USD, driven by liberalization, reduced trade costs, and the rising influence of emerging economies, particularly BRICS+ nations. Traditional Integrated World Market assumptions are critiqued, with more nuanced approaches (incorporating economic geography and product differentiation) revealing substantial underestimations of cropland use, carbon emissions, and trade value projections under full integration scenarios. Trade liberalization delivers a "liberalization dividend," boosting GDP growth by 1.2–2.6 percentage points annually in successfully transitioning economies, while enhancing agricultural total factor productivity through knowledge spillovers and technology adoption, especially in Southeast Asia. However, benefits are heterogeneous: import competition can spur innovation but also displace smallholders and exacerbate deindustrialization risks. The ascent of BRICS nations has reconfigured global trade balances, with Brazil exemplifying volume-driven export growth contrasting Argentina's value-added processing focus. Price insulation policies during volatility episodes often amplify global shocks via beggar-thy-neighbor effects. Emerging regionalism (ASEAN, MERCOSUR convergence) and digital transformation offer pathways to efficiency, yet challenges persist, including infrastructure gaps, fiscal constraints on WTO flexibilities, smallholder income shortfalls, and environmental externalities from mechanisms like the EU's CBAM. The analysis underscores the need for balanced policies that harness liberalization gains while addressing food security, equity, and sustainability imperatives in a multipolar agricultural order.