1、The impact of changes in the fundamental drivers of trade Productivity,trade costs,and trade policies Background paper forThe State of Agricultural Commodity Markets(SOCO)2022The impact of changes in the fundamental drivers of trade Productivity,trade costs,and trade policies Background paper forThe

2、 State of Agricultural Commodity Markets(SOCO)2022 David Laborde and Valeria Pieiro International Food Policy Research Institute(IFPRI)Food and Agriculture Organization of the United NationsRome,2022Required citation:Laborde,D.and Pieiro,V.2022.The impact of changes in the fundamental drivers of tra

3、de Productivity,trade costs,and trade policies.Background paper for The State of Agricultural Commodity Markets(SOCO)2022.Rome,FAO.https:/doi.org/10.4060/cc3135enThe designations employed and the presentation of material in this information product do not imply the expression of any opinion whatsoev

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11、be conducted in accordance with the Arbitration Rules of the United Nations Commission on International Trade Law(UNCITRAL).Third-party materials.Users wishing to reuse material from this work that is attributed to a third party,such as tables,figures or images,are responsible for determining whethe

12、r permission is needed for that reuse and for obtaining permission from the copyright holder.The risk of claims resulting from infringement of any third-party-owned component in the work rests solely with the user.Sales,rights and licensing.FAO information products are available on the FAO website(w

13、ww.fao.org/publications)and can be purchased through publications-salesfao.org.Requests for commercial use should be submitted via:www.fao.org/contact-us/licence-request.Queries regarding rights and licensing should be submitted to:copyrightfao.org.Cover photograph:FAO|iii|AbstractCountries varying

14、natural resource endowments are vital in explaining international trade.Traditional trade theory suggests that differences in technology and factor endowments lead countries to specialize and export certain goods or services in which they have a comparative advantage.The computable general equilibri

15、um(CGE)model simulations used in this paper aim to explain agricultural trade patterns and show how agricultural trade would change in response to productivity,infrastructure and institutions improvements and trade cost changes from regional and global trade liberalization.A set of nine scenarios is

16、 used to explore the effects of productivity,transport costs,non-tariff barriers(NTB),and border measures changes on agricultural and food trade and related welfare implications.Policies driving agricultural productivity growth such as investments in research and development,economic reforms that st

17、rengthen incentives for farmers,rural education and extension,and improved infrastructure are shown to reduce the yield gap and improve productivity.Lower trade costs help comparative advantage play out,resulting in gains from trade.Measures taken to increase trade integration in Africa and Asia wil

18、l be important for economic growth and development in these regions.|v|ContentsAbstract iiiAcronyms and abbreviations viiChapter 1-Introduction.11 Introduction 3Chapter 2-Analytical framework.52 Analytical framework 721 Productivity gap scenarios 822 Improving infrastructure and institutions scenari

19、os 1123 Global and regional integration scenarios 12Chapter 3-Model.133 Model 15Chapter 4-Data.194 Data 21Chapter 5-Results.235 Results 2551 Productivity gap 2652 Improving infrastructure and institutions 3353 Global and regional integration 36Chapter 6-Conclusions.436 Conclusions 45REFERENCES.47|vi

20、|FiguresFigure 1 Yield gaps at low level of inputs farming and mixed inputs farming,2005 9Figure 2 Average annual growth rates in agricultural total factor productivity,1979-1999and1999-2019 10Figure 3 Reduced yield gaps and agricultural productivity 11Figure 4 Production side 15Figure 5 Demand side

21、 16Figure 6 Real GDP,percentage change from baseline 25Figure 7 Real GDP,percentage change from baseline 27Figure 8 Agrifood production,percentage change from baseline-29Figure 9 Agrifood consumption,percentage change from baseline-f 29Figure 10 Exports by commodity group,world,percentage change fro

22、m baseline 31Figure 11 Revealed Comparative Advantages,sub-Saharan Africa 32Figure 12 Revealed Comparative Advantages,South-eastern Asia 32Figure 13 Real GDP,percentage change from baseline 33Figure 14 Agrifood production,percentage change from baseline 34Figure 15 Agrifood consumption,percentage ch

23、ange from baseline 34Figure 16 Terms of trade,percentage change from baseline 35Figure 17 Real GDP,percentage change from baseline 36Figure 18 Agrifood production,percentage change from baseline 37Figure 19 Agrifood consumption,percentage change from baseline 38Figure 20 Terms of trade,percentage ch

24、ange from baseline 38Figure 21 Export diversification index 39|vii|Acronyms and abbreviationsAfCFTA African Continental Free Trade AreaCES constant elasticity of substitutionCGE computable general equilibriumEDI Export Diversification IndexGDP gross domestic productNTB non-tariff barriersNTM non-tar

25、iff measuresRCA Revealed Comparative AdvantageRCEP Regional Comprehensive Economic PartnershipSPS Sanitary and phytosanitaryTBT Technical barriers to tradeTCI Trade complementarity indexTFP Total factor productivityCHAPTER 1Introduction|3|1 IntroductionCountries varying natural resource endowments a

26、re vital in explaining international trade.Traditional trade theory states that differences in factor endowments lead countries to specialize and export certain goods or services where they have a comparative advantage.This global process results in a more efficient allocation of resources,which lea

27、ds to an increase in global social welfare,in other words,“trade creates value”.This theory has been broadened by the introduction of other factors that influence comparative advantage,such as transportation costs,economies of scale,and government policy.Krugmans New Trade Theory supplements traditi

28、onal trade theory by adding two important observations:consumers prefer brand diversity and production favors economies of scale.Reducing tariffs mitigates the“loss of efficiency”costs generated by the distortions to the price system that the tariff causes.Reducing the degree of market protection al

29、so expands the market,allowing producers in exporting countries to capitalize on economies of scale,benefitting the whole economy.The papers main objective is to discuss trade policy approaches that leverage gains from trade to promote welfare and growth.These approaches can include efforts towards

30、further trade liberalization,effective trade facilitation,harmonization,or mutual recognition of standards,including environmental provisions,within a multilateral and/or regional trade agreement context.The computable general equilibrium(CGE)model simulations used in this paper aim to explain agric

31、ultural trade patterns and show how agricultural trade would change in response to productivity,infrastructure and institutions improvements and trade cost changes from regional and global trade liberalization.The analysis builds on simulation results of a set of nine scenarios designed to explore t

32、he effects of productivity,transport costs,non-tariff barriers(NTB),and border measures changes on agricultural and food trade and related welfare implications.The main objectives of the simulations are to assess the fundamental forces that drive bilateral trade flows productivity,transport costs,NT

33、Bs,and border measures;the stylized impacts of new and deep regional trade agreements,inspired by the African Continental Free Trade Area(AfCFTA)and the Regional Comprehensive Economic Partnership(RCEP);and a potential multilateral agreement at the global level.The analysis intents to:(i)assess some

34、 of the fundamental drivers of trade;(ii)explore how these drivers determine trade flows and the net trade position of developed and developing countries and discuss whether developing countries trade less than developed ones;(iii)discuss whether some countries/regions tend to trade globally rather

35、than regionally;quantify the contribution of trade to welfare;(iv)simulate the impact of exploratory deep trade integration scenarios;and,(v)quantify the impact of market integration at the global level.The paper is organized as follows:Section 2 presents the scenarios,section 3 covers the methodolo

36、gy adopted for the study,and section 4 the data used.Section 5 presents the results and section 6 offers concluding remarks.CHAPTER 2Analytical framework|7|2 Analytical frameworkSince the launch of the Doha Round in 2001,agricultural trade has increased substantially(by almost 200percent between 200

37、1and2015).This remarkable growth can be attributed to significant increases in food demand from developing countries,stemming from demographic growth(mainly in Africa),rapid urbanization,and rising middle-income populations(mainly in Asia)that tend to demand more and higher quality food.The pressure

38、s of increased food demand have resulted in higher food prices exacerbated by COVID-19 pandemic and the Russian-Ukrainian conflict,which further strain the worlds increasingly scarce agricultural resources.Trade has also seen more players from the South in the last decades.As populations and food de

39、mand grow,so will the need for food imports by the developing world,as many developing countries will not be able to meet their domestic demand with their own domestic production.There has been an increase of 80percent in produced calories per capita(for food and non-food use),and the share of food,

40、measured in calories,crossing an international border rose from 12.3percent to over 25percent over the last 40 years.The combined effects led to 4.2 times more calories crossing a border in 2018 than in 1961(Laborde,Pieiro and Swinnen,forthcoming)and much of this expansion in food trade has come fro

41、m developing countries themselves.Globalization has brought welfare improvements;global inequality has declined as the share of the worlds population in extreme poverty(USD1.9poverty line)fell from 36percent in 1990 to 8.6in2018.However,there are many differences by region.Poverty in sub-Saharan Afr

42、ica is still a problem,even though the population living in extreme poverty decreased from 55percent in 1990 to 39percent in 2019(World Development Indicators).In South-eastern Asia,the population living in extreme poverty decreased significantly,from 32percent in 1990 to around 3.7percent in 2019.S

43、everal factors have been identified as constraints to food production in Africa.These include land degradation,pests and diseases,mismanagement of water resources,inadequate food production,storage practices,and food processing technologies.More indirect factors such as civil conflicts and wars,poor

44、 economic policies to support food production,and the low economic and social status of women,who constitute the majority of food producers all contribute to diminishing overall food production(Wambugu,2005).In the Ricardian approach,trade patterns are explained by relative productivity(comparative

45、advantages)and trade costs.With the new trade theory of the 1970s,demand represented by differences in populations taste and income gained attention.In this report,we focus on the two first drivers-productivity and trade costs.The latter may bias the allocation of production(and consumption)with eco

46、nomic and environmental costs(these are not specifically analysed in this paper).This paper will consider the ways in which multilateral and regional trade policy efforts can address todays challenges for sustainable development.More specifically,trade policies in food and agriculture should advance

47、 nutrition goals,strengthen food security and minimize the trade-offs between economic goals and environmental impacts.It is also important for trade policies to increase the resiliency of the global agrifood system to shocks such as pandemics,extreme weather events such as droughts,and conflicts.To

48、 meet these goals,trade policies are becoming increasingly important as new global challenges arise.As global populations increase,so will urban populations and global demand for food.|8|The impact of changes in the fundamental drivers of trade Productivity,trade costs,and trade policies|8|Additiona

49、lly,as incomes rise,the demand for meat and processed food is expected to increase dramatically.However,despite these advances,many people will still lack access to enough and nutritious food to meet their daily needs.The obvious answer to many of these problems lies in increasing global production

50、of food,but the question becomes how to achieve increased production and by how much?This paper will delve into three key ways to increase food production and improve the distribution of food:Closing the yield gap,investing in infrastructure,and trade integration.The scenarios are divided into three

51、 blocks:(1)narrowing the productivity gap,(2)improving infrastructure and institutions,and(3)trade integration.Each block consists of three scenarios,the first one at a global level,followed by a scenario in which the intervention-reduction of the yield gap,reduction of trade costs,or higher trade i

52、ntegration-only applies to a specific region of the world.Even though we move from a global to a regional shock,the results will be seen in all regions.Table 1 provides an overview of the scenarios implemented.Table 1.SimulationScenarioVariableRegionsPercentage changes1Narrowing the productivity gap

53、Land+Labour+Capital productivityGlobal50%of existing yield gaps2Narrowing the productivity gapLand+Labour+Capital productivitySub-Saharan Africa50%of existing yield gaps3Narrowing the productivity gapLand+Labour+Capital productivitySouth-eastern Asia50%of existing yield gaps4Improve infrastructure a

54、nd institutions Transport costs+non-tariff barriersGlobal50%reduction5Improve infrastructure and institutionsTransport costs+non-tariff barriersSub-Saharan Africa50%reduction6Improve infrastructure and institutionsTransport costs+non-tariff barriersSouth-eastern Asia50%reduction7Global integrationTr

55、ansport costs+non-tariff barriers+border measuresGlobal100%reduction8Regional integration Intra-regional:Transport costs+non-tariff barriers+border measuresDeep integration Africa100%reduction9Regional integration Intra-regional:Transport costs+non-tariff barriers+border measuresDeep integration Asi

56、a100%reductionSource:Laborde,D.and Valeria,P.2022.The impact of changes in the fundamental drivers of trade Productivity,trade costs,and trade policies.Background paper for The State of Agricultural Commodity Markets 2022.Rome,FAO.https:/doi.org/10.4060/cc3135en.2.1 Productivity gap scenariosAgricul

57、tural growth can occur by bringing new resources into production(new land,extension of irrigation,or input intensification per hectare)or by raising the productivity of existing resources.There are two concepts to be considered while discussing productivity increases in the agricultural sector-yield

58、s and total factor productivity.Yield is a standard measure of the amount of agricultural production harvested per unit of land area,while total factor productivity(TFP)is the aggregate quantity of outputs produced by the agricultural sector divided by the aggregate quantity of inputs used to produc

59、e those outputs.|9|When referring to yields,we focus on the yield gap-defined as the difference between actual farm yield and the yield potential-to see how far each country is from its potential.Figure 1 shows yield gap ratios compared to potentials attainable with low input use farming1 and advanc

60、ed farming(mixed inputs)2 presented by Fischer et al.(2011).The maps(Figure 1)show the estimated yield gaps as the percentage of yield potential for cereals,roots and tubers,pulses,sugar crops,oil crops,and vegetables combined for 2005.At the global level,the achieved crop yields are just over 50per

61、cent of potentially achievable yields,assuming mixed levels of input.Yield gaps increase to about 150percent in traditional low-level input farming systems.Disparities across and within regions are remarkably high.At the regional level,we can see significant differences in both ways of producing the

62、 above listed crops.Sub-Saharan Africa is the region with the largest yield gap for both types of farming.In this region,the actual yields are lower by a factor of four compared to mixed input potentials.The rest of Africa,Eastern Europe,and the countries in Central Asia also show large yield gaps,w

63、hile Northern and Western Europe,Northern America,Eastern Asia,and Oceania yield gaps are the smallest.Looking at regional data,Fischer et al.(2011)conclude that across individual commodity groups,yield gap ratios are similar.Figure 1.Yield gaps at low level of inputs farming and mixed inputs farmin

64、g,2005 Source:Authors illustration based on Fischer,G.,Hizsnyik,E.,Prieler,S.&Wiberg,D.2011.Scarcity and abundance of land resources:competing uses and the shrinking land resource base.SOLAW Background Thematic Report TR02.Rome,FAO.Conforms to Map No.4170 Rev.19 United Nations(October 2020).Notes:Fi

65、nal boundary between the Sudan and South Sudan has not yet been determined.Dotted line represents approximately the Line of Control in Jammu and Kashmir agreed upon by India and Pakistan.The final status of Jammu and Kashmir has not yet been agreed upon by the parties.1 Low-level inputs/traditional

66、farming:under the low input,traditional management assumption,the farming system is mainly subsistence-based and not necessarily market-oriented.Production is based on traditional cultivars,labour-intensive techniques,and no application of nutrients,no use of chemicals for pest and disease control a

67、nd minimum conservation measures.2 Mixed level of inputs:Under the mixed level of inputs,only the best land is assumed to be used for high-level input farming.2.Analytical framework|10|The impact of changes in the fundamental drivers of trade Productivity,trade costs,and trade policies Looking at TF

68、P growth,we can observe that agricultural productivity growth may be slowing in some countries and regions,remains very low in sub-Saharan Africa and is keeping momentum in most developing countries(Fuglie,Jelliffe and Morgan,2021).Figure 2 compares the average annual growth rates in agricultural TF

69、P between 1979-1999and1999-2019 using the data provided by Fuglie,Jelliffe and Morgan(2021).TFP growth appears to have remained robust overall but has slowed in some countries,specially developed countries.TFP growth in developing countries doubled from less than 1percent per year from 1979-1999 to

70、over 2percent per year from 1999-2019.China and Brazil sustained exceptionally high TFP growth over the past two decades and India has had a remarkable performance in the last 15 years.Several other developing regions,including South-eastern Asia,Northern Africa,Latin America and the Caribbean,also

71、had relatively high TFP growth in the 1990s and the 2000s.However,these regions have seen a smaller growth in the last decade.In sub-Saharan Africa,TFP growth has been below 1percent per year over the last decade.To summarize,TFP growth has slowed since the mid-1990s in countries that have already r

72、eached high levels of productivity(Alston,Beddow and Pardey,2009;Fuglie,Wang and Ball,2012).However,at a global level,there is no evidence that TFP growth is slowing down.Figure 2.Average annual growth rates in agricultural total factor productivity,19791999 and 19992019 Source:Authors calculation b

73、ased on Fuglie,K.,Jelliffe,J.&Morgan,S.2021.International agricultural productivity.TFP indices and components for countries,regions,countries grouped by income level,and the world,1961-2020.Last updated:22 October 2021.USDA Economic Research Service.www.ers.usda.gov/data-products/international-agri

74、cultural-productivity/.Conforms to Map No.4170 Rev.19 United Nations(October 2020).Notes:Final boundary between the Sudan and South Sudan has not yet been determined.Dotted line represents approximately the Line of Control in Jammu and Kashmir agreed upon by India and Pakistan.The final status of Ja

75、mmu and Kashmir has not yet been agreed upon by the parties.|11|Figure 3 shows the impact of reducing yield gaps by half 3 in every country on agricultural productivity.The most significant impact would be seen in Africa,followed by Eastern Europe,Central Asia,and Latin America and the Caribbean.Fig

76、ure 3.Reduced yield gaps and agricultural productivity Increase in agricultural productivityNote:AfrC:Middle Africa,AfrE:Eastern Africa,AfrN:Northern Africa,AmericaN:Northern America and Mexico,Andean:Andean countries,AsiaC:Central Asia,AsiaSO:Southern Asia,AsiaW:Western Asia,AUS:Australia,BRN:Brune

77、i Darussalam,CAM:Central America and the Caribbean,CHN:China,EFTA:European Free Trade Association,EU28:European Union and United Kingdom of Great Britain and Northern Ireland,IDN:Indonesia,JPN:Japan,KHM:Cambodia,KOR:Republic of Korea,LAO:Lao Peoples Democratic Republic,MERCOSUR:Mercosur countries,MY

78、S:Malaysia,NZL:New Zealand,PHL:Philippines,THA:Thailand,VNM:Viet Nam,xAfrS:Rest of Southern Africa,xAsia:Rest of Asia,xEUR:Rest of Europe,XSE:Rest of South-eastern Asia,ZAF:South Africa.Source:Authors calculation based on Fischer,G.,Hizsnyik,E.,Prieler,S.&Wiberg,D.2011.Scarcity and abundance of land

79、 resources:competing uses and the shrinking land resource base.SOLAW Background Thematic Report TR02.Rome,FAO.2.2 Improving infrastructure and institutions scenariosTrade costs include transportation costs(policies,freight,insurance),border measures(tariffs,tariff rate quotas,export restrictions)and

80、 standard-like nontariff measures(NTMs,NTBs).These costs represent a high share of the total cost of agricultural and food products,given that the goods tend to be bulky or perishable and must meet quality and safety standards.Technical barriers to trade(TBT)are extensively used in international tra

81、de,with more than 30percent of product lines and almost 70percent of world trade affected by them.Sanitary and phytosanitary(SPS)measures are typically applied to agricultural products and affect almost 20percent of world trade.Price control measures affect about 15percent of world trade,being appli

82、ed to many sectors,particularly,a large share of world trade regarding agriculture-related 3 In order to cut the yield gap by 2,productivity increases are given by 1-gap/2/1-gap-1 2.Analytical framework|12|The impact of changes in the fundamental drivers of trade Productivity,trade costs,and trade p

83、olicies products.Export measures are also frequently applied to agriculture.Coverage of NTMs by broad category shows that agriculture is the most affected,with most of the worlds agricultural trade subject to some form of SPS and,or TBT measures(UNCTAD,2021).Border non-tariff measures,such as inspec

84、tion and certification requirements,quarantines,quotas,and other measures generate entry costs that cover more than 50percent of world trade.The costs of such measures vary across countries and sectors,with Africa and Latin America and the Caribbean being the regions with the highest costs and the a

85、utomotive industry and agriculture the most affected sectors.While all regions use this type of measure(border non-tariff measures),the cost and the impact they generate are different across regions and sectors(UNCTAD,2021).Increased transaction costs are seen as a barrier for farmers,especially sma

86、llholders,from entering the market,hence not allowing them the benefit from trading their products(Pingali,Khawaja and Meijer,2005).Interventions aimed at reducing transaction costs would encourage increased farmer participation in competitive markets,enabling and encouraging farmers to improve farm

87、ing productivity.In this paper,we analysed the improvement of infrastructure and institutions by reducing transport costs and NTBs by half.The data for the NTBs come from FAO and IFPRI(2022)4.2.3 Global and regional integration scenariosTrade is a central element for global food security,and in the

88、case of many food-deficit countries,also for national food security.Despite this important role played by the food trade,there are substantial trade barriers.In spite of some improvements in the two decades prior to the global financial crisis,significant tariff barriers remain higher in agricultura

89、l products than in any other product group.Since 2000,also NTMs have increasingly been used and may constitute trade barriers.Integration into the world economy could be a way for countries to promote economic growth,development,and poverty reduction by facilitating the flow of goods,services,capita

90、l and people(Atkin and Donaldson,2021 and Park and Claveria,2018).Das and Grine(2020)show that globalization is not merely the means of opening new markets but of achieving higher productivity through technology transfers.Some developing countries have made much progress toward more trade integratio

91、n,such as countries in Asia and,to a minor degree,countries in Latin America and the Caribbean.However,other developing regions such as,Africa and Western Asia,are lagging behind.Trade agreements provide the institutional infrastructure and can be a pillar of regional integration by promoting a redu

92、ction in trade costs and defining rules and regulations that the signatory countries must follow.These agreements tend to increase trade and promote foreign direct investment and regional and global value chains(Ruta,2017).Deeper trade integration is analysed to see the impact on economic growth wit

93、hin each country and region where three scenarios are considered.The first one includes a global integration,where transport costs,NTBs and all border measures are eliminated;the second scenario arose from the AfCFTA and is carried out as an illustration of the possibilities that a complete agreemen

94、t may bring to the region and the world;and the third scenario is an illustration of deeper regional integration in Asia.4 The collection of data on NTMs on agricultural products in the ASEAN region and the design of a database is based on various existing databases,including the WTO I-TIP,World Ban

95、ks Temporary Trade Barriers database,and the UNCTAD TRAINS portal.CHAPTER 3Model|15|3 ModelMIRAGRODEP is a multiregion,multisector CGE model with perfect competition and constant returns to scale(see Bout,Laborde and Pieiro,2021,for complete documentation).It is usual to assume perfect competition i

96、n all sectors,enabling a detailed geographic and sector decomposition.The model is based on an input-output framework and its theoretical structure is derived from optimizing the behavior of economic agents,particularly households and firms.In all these models,Walrass law holds:if there is equilibri

97、um in all but one of the markets,equilibrium also holds in the last market.Consequently,one price is held fixed,and all other prices are evaluated relative to this numeraire.From the supply side in each sector(Figure 4),the production function is a Leontief function of value-added and intermediate i

98、nputs;one output unit needs x percent of an aggregate of productive factors(labour,both unskilled and skilled;capital;land and natural resources)and(1 x)percent of intermediate inputs.The intermediate inputs function is an aggregate constant elasticity of substitution(CES)function of all goods,which

99、 means that substitutability exists between two intermediate goods,depending on the relative prices of these goods.This substitutability is constant and at the same level for any pair of intermediate goods.Similarly,value-added is a CES function of unskilled labour,land,natural resources,and a bundl

100、e of skilled labour and capital.This nesting allows for less substitutability between capital and skilled labour than between these and other factors.Figure 4.Production sideProduction(Y-PY)LeontiefCESCESCESValue added(VA-PVA)Unskilled labor(L-PL)Commodity 1(IC-PIC)Commodity I(IC-PIC).Land(TE-PTE)Ca

101、pital(KTOT-PK)Skilled labor(H-PH)Natural resources(RN-PRN)Capital-Skilledlabor bundle(Q-PQ)Intermediate consumption(CNTER-PCNTER)Source:Bout,A.,Laborde D.&Pieiro,V.2021.MIRAGRODEP,an analytical model adapted to economic and trade reforms.In The road to the WTO twelfth Ministerial Conference:A Latin

102、American and Caribbean perspective,eds.Valeria Pieiro,Adriana Campos,and Martn Pieiro.Pp.169-179.San Jose,Costa Rica:Instituto Interamericano de Cooperacin para la Agricultura(IICA)&International Food Policy Research Institute(IFPRI).https:/doi.org/10.2499/p15738coll2.134842.|16|The impact of change

103、s in the fundamental drivers of trade Productivity,trade costs,and trade policies|16|Unskilled labour is imperfectly mobile between agricultural and non-agricultural sectors,according to a constant elasticity of transformation function.Land is also imperfectly mobile between agricultural sectors.Cap

104、ital in a given region,whatever its origin(domestic or foreign),is assumed to be obtained by assembling intermediate inputs according to a specific combination.The capital good is the same regardless of the sector.The demand side is modeled in each region through a representative agent that owns all

105、 factors of production and whose propensity to save is constant(Figure 5).The remainder of the national income is used to purchase final consumption.Preferences between goods are represented by a linear expenditure systemconstant elasticity of substitution function.Additionally,the elasticity of sub

106、stitution is constant only among the sectoral consumptions over and above a minimum level.The minimal level of consumption can vary across the region(e.g.developing versus developed country).MIRAGRODEP is a bilateral trade model consistent with the Armington assumption:commodities are assumed to be

107、heterogeneous according to their origin and,thus,imperfect substitutes for one another(Armington,1969).Nested CES functions are used to reflect preferences among varieties originating from different countries.Therefore,countries can export and import the same product simultaneously due to consumer p

108、references for different varieties.The price transmission between the domestic and international markets is imperfect and highly dependent on the choice of the CES trade elasticities and the initial share of trade.For the latest studies,Armington elasticities are drawn from the GTAP 11 database and

109、are adjusted for each region based on sectoral composition.The import tree is specific to each market(importer*sector)to reflect each exporters export similarities(HS4 level).Figure 5.Demand sideDomestic absorption(DEMTOT-PDEMTOT)Local demand(D-PD)Total imports(M-PM)Partner 1(DEMA-PDEMA)Partner S(DE

110、MA-PDEMA)CESCES.Source:Bout,A.,Laborde D.&Pieiro,V.2021.MIRAGRODEP,an analytical model adapted to economic and trade reforms.In The road to the WTO twelfth Ministerial Conference:A Latin American and Caribbean perspective,eds.Valeria Pieiro,Adriana Campos,and Martn Pieiro.Pp.169-179.San Jose,Costa R

111、ica:Instituto Interamericano de Cooperacin para la Agricultura(IICA)&International Food Policy Research Institute(IFPRI).https:/doi.org/10.2499/p15738coll2.134842.In MIRAGRODEP,the government is explicitly modeled as different from private agents.Government income consists of taxes collected on prod

112、uction,factors of production,exports,imports,consumption,and households income.The government maximizes a Cobb-Douglas utility function:government spending on each commodity is a fixed share,in value,of total public expenditure on goods and services.Government purchases are subject to taxes.The|17|m

113、odel includes four important assumptions:the external account closure,the private account closure,the government account closure,and the factor market closure.The private account closure assumption concerns the savings-investment closure.The MIRAGRODEP model is neo-classical:the marginal propensity

114、to save is constant such that variation in income leads to variation in savings,which brings variations in investment.The external account closure concerns the assumption of the current account.A trade shock could affect this account balance since this policy reform entails a variety of border tarif

115、fs and,consequently a variation in imports and exports.For this paper,the real exchange is affected by the reform so that the current account balance is constant.The real exchange rate adjustment could occur through an adjustment of the nominal exchange rate(devaluation,depreciation)or different evo

116、lutions of domestic prices in other regions(i.e.,competitive disinflation).The government or public account closure assumption concerns how the public balance is affected when a shock or a reform changes taxes.In many studies,we assume that after a shock that impacts customs duties,a consumption tax

117、(VAT)is adjusted to maintain real public expenses per capita constant while the public deficit is constant in the percentage of gross domestic product(GDP).With this assumption,the level of public services in each country is constant and there is no variation in public deficit and no associated crow

118、ding-out effect on private investment.In a sensitivity analysis,it is possible to consider other closures,including changes in public expenditure and the introduction of a lump-sum tax.For this paper,the comparative static version of the model was used,showcasing the before and after the shock was i

119、mplemented.The results are expressed as percentage changes from the base year.3.ModelCHAPTER 4Data|21|4 DataThe first data source for MIRAGRODEP is the GTAP11 database,prerelease 2(see Aguiar et al.,2019,for the complete background),which provides world macroeconomic accounts and trade flows for fou

120、r reference years 2004,2007,2011,2014,and 2017.The database describes values of production,and intermediate and final consumption of commodities and services for 141 countries or regions and 65 sectors,but also global bilateral trade patterns,international transport margins,and protection matrices t

121、hat link individual countries/regions.The market access data come from the MacMap-HS6 version 2.1 database(Bout et al.,2008;Guimbard et al.,2012),which measures protection in 2004,2007,2010,2013,and 2016 and includes all regional agreements and trade preferences existing to these dates.Therefore,pro

122、tection is measured at the bilateral level for each HS6 line.A critical feature of the model is the Consistent Tariff Aggregator approach which has been implemented for MIRAGRODEP.This is an important element of the model when it comes to trade shocks scenarios since the simulations are often conduc

123、ted at a relatively low level of sector disaggregation(25 sectors).In contrast,protection is measured at a very detailed level.The Consistent Tariff Aggregator approach captures the exclusion effects and the variance of tariffs at a detailed(tariff line)level.Not considering this approach would yiel

124、d inconsistent welfare effects since simple trade weights are endogenous and the welfare changes induced by a tariff are a function of its powers,not its level per se.Usually,MIRAGRODEP includes other data:(i)specific Social Accounting Matrix when MIRAGRODEP is used in collaboration with a specific

125、government(Bout,Laborde and Traor,2021,for Morocco);(ii)data collected on export taxes for a specific project(Laborde,Estrades and Bout,2013);(iii)evaluation of ad valorem equivalent of NTMs(Bout,Laborde and Traor,2021).Lastly,MIRAGRODEP can be connected to households surveys:Laborde,Martin,and Vos(

126、2020)conducted two simulations of the economic consequences of COVID-19 pandemic;to estimate the poverty impact of the shock,MIRAGRODEP is connected to the POVANA household dataset and model,which includes data on the full income distribution for over 300 000 representative households globally.The m

127、odel and the dataset are linked in a top-down fashion.CHAPTER 5Results|25|The impact of changes in the fundamental drivers of trade Productivity,trade costs,and trade policies 5 ResultsThis paper analyses three different strategies for agricultural development,focusing on sub-Saharan Africa and Sout

128、h-eastern Asia.The following sections look at these different strategies separately with the idea of understanding the impact of each of them individually by region and group of commodities.However,as a viable development strategy,a combination of the three strategies should be considered.Before ana

129、lyzing each set of scenarios separately-productivity,infrastructure and integration,it is important to compare them together for the case of the global scenarios.Also,it is important to note that the second set of scenarios related to improvements in infrastructure and institutions are the most real

130、istic in terms of magnitude and probability of being reached.At the same time,the third set of scenarios should be seen as an illustration of the upper bound,almost a theoretical exercise of the case of free trade and perfect cooperation between countries.A global reduction of the yield gap generate

131、s the most significant increase in real GDP in all regions,showing the importance of investment in research and development and technologies that foster productivity.It also highlights the differences by region,being Africa the most benefited with a 20percent increase in their GDP,followed by Southe

132、rn Asia with 6percent and Latin America and the Caribbean with a 4percent increase with respect to the baseline(Figure 6).The reduction of trade costs and barriers also generates increases in real GDP in all regions but to a smaller degree,given that productivity increases generate more production w

133、hile a reduction in trade costs can be seen as a shift in trade patterns.South-eastern Asia is the region with the highest increase in real GDP(almost 2percent with respect to the baseline).Globally free trade increases real GDP in the world by 1.2percent,with regional differences.South-eastern Asia

134、 increased its GDP by more than 6percent,followed by all other regions in Asia with around 1.5percent,Africa with 1.3percent,Latin America and the Caribbean with 1.2percent,Europe with 1percent and Sub-Saharan Africa with less than 1percent.Figure 6.Real GDP,percentage change from baseline0510152025

135、WorldAfricaEastern Asia,South-eastern Asia and OceaniaSouthern AsiaWestern Asia andCentral AsiaNorthern AmericaLatin America and theCaribbeanEuropeSouth-eastern AsiaSub-Saharan AfricaProductivity-GlobalInfrastructure-GlobalIntegration-GlobalPercentage change Note:Productivity-Global:scenario in whic

136、h yield gaps are reduced by half in the world;Infrastructure-Global:scenario in which transport costs and non-tariff barriers are reduced by half in the world,Integration-Global:scenario in which all transport costs,non-tariff barriers and border measures are eliminated in the world.Source:Laborde,D

137、.and Valeria,P.2022.The impact of changes in the fundamental drivers of trade Productivity,trade costs,and trade policies.Background paper for The State of Agricultural Commodity Markets 2022.Rome,FAO.https:/doi.org/10.4060/cc3135en.|26|The impact of changes in the fundamental drivers of trade Produ

138、ctivity,trade costs,and trade policies The impacts of these scenarios vary.The ones related to productivity increases are about producing and shifting comparative advantages,while the other two sets of scenarios are about reorganizing trade patterns through the direct effects of trade costs.The magn

139、itude of the effect of reducing the yield gap and reducing trade costs on prices is similar,even though the first-order effect and mechanism of adjustment differ.In the first case,it is seen through a reduction in costs at the farm level,and in the second one,a reduction in costs throughout the whol

140、e value chain.The magnitude of the change in prices will be similar in the case of a region like Northern America with a small yield gap and high level of NTBs than a region like sub-Saharan Africa with large yield gaps and fewer NTBs.The Revealed Comparative Advantages(RCA)index is related to the l

141、evel of specialization that each region has per commodity group.For example,Latin America and the Caribbean is more specialized in grains and less in coffee and tea.The RCA shows that Africa would benefit from the productivity scenario,both African production and exports would increase.In this case,

142、the region could move towards a similar development pattern to LAC.The scenarios related to NTBs(the last two sets)suggest that Africa does not have major problems related to market access,but their problem is low levels of productivity and hence production.The Trade Complementary Index(TCI)shows ho

143、w the different scenarios change complementary between countries.This index does not change much in either scenario,except for sub-Saharan Africa and South-eastern Asia in the productivity scenarios that only apply to these regions.In this scenario,trade structure changes;Africa increases their prod

144、uction,exporting a lot more and importing less,while Asia will export less rice to Africa.These scenarios show that Latin America and the Caribbean,Asia and Africa have different constraints in pursuing agricultural growth.Latin America and the Caribbean and Asia can benefit from working towards eli

145、minating trade barriers,while Africa can benefit from increasing agricultural productivity.The following sections will analyse each set of scenarios in more detail.5.1 Productivity gap The impact of an increase in TFP will be seen not just in the agricultural sector,but also in changes in real incom

146、e and income per capita by country.Given the general equilibrium modelling,farmers are assumed to react to price signals,given the open production possibilities.Crop choice is endogenous.Therefore,we model the impact of reducing the yield gap by upgrading technology,improving seed quality,building i

147、rrigation systems,or developing an extension service.Over time,changes in TFP growth will affect the profitability of different crops and the supply of different commodities.We run six scenarios in this first set.The first scenario(Productivity-Global),where the yield gap is reduced by half in the w

148、orld,and two more scenarios in which only one region of the world will have the yield gap reduction.The second scenario(Productivity-Africa)covers reducing the gap for only sub-Saharan Africa,while the third scenario(Productivity-Asia)looks at the case of South-eastern Asia.The other three scenarios

149、 are an extension of the first three,in which only the primary agricultural sector reduces its yield gap,leaving the agroindustry untouched(Prod-Ag-Global,Prod-Ag-Africa and Prod-Ag-Asia).5.Results|27|If the yield gap is reduced by 50percent globally,the world GDP will be 1.57percent higher than in

150、the base and welfare will also be higher by around 3percent(Figure 7).In such a scenario,all regions would benefit from higher productivity levels.However,there are significant differences in the size of the effect by region subject to the initial yield gap,the rate of TFP growth needed to reduce th

151、e yield gap,and the mechanisms of adjustment that are required to deal with the initial shock(e.g.the structure of production).In this case,Africa is the region that gains the most,with a GDP increase of around 16percent,followed by Southern Asia with almost 6percent,and Latin America and the Caribb

152、ean with almost 4percent.Eastern Asia,South-eastern Asia and Oceania as a region,Western and Central Asia,Northern America,Europe,and South-eastern Asia(separately)will have positive terms of trade export prices increase more than the import prices while the rest of the regions will have the opposit

153、e result.This is interlinked with the fact that imports will grow more(compared to the base)than exports for the countries that see an improvement in their terms of trade and vice versa for the regions where imports will have a slower growth rate than exports.Figure 7.Real GDP,percentage change from

154、 baseline 0510152025WorldAfricaEastern Asia,South-eastern Asia and OceaniaSouthern AsiaWestern Asia andCentral AsiaNorthern AmericaLatin America and the CaribbeanEuropeSouth-eastern AsiaSub-Saharan AfricaProductivity-GlobalProd-Ag-GlobalProductivity-AfricaProd-Ag-AfricaProductivity-AsiaProd-Ag-AsiaP

155、ercentage changeNote:Regional groups are not mutually exclusive:South-eastern Asia is a subgroup of Eastern Asia,South-eastern Asia and Oceania and sub-Saharan Africa is a subgroup of Africa.Productivity-Global:scenario in which productivity gaps are reduced by half in the world;Prod-Ag-Global:scena

156、rio in which only yield gaps in agriculture are reduced by half in the world;Productivity-Africa:scenario in which productivity gaps are reduced by half only in sub-Saharan Africa;Prod-Ag-Africa:scenario in which only yield gaps in agriculture are reduced by half in sub-Saharan Africa;Productivity-A

157、sia:scenario in which productivity gaps are reduced by half only in South-eastern Asia;Prod-Ag-Asia:scenario in which only yield gaps in agriculture are reduced by half in South-eastern Asia.Source:Laborde,D.and Valeria,P.2022.The impact of changes in the fundamental drivers of trade Productivity,tr

158、ade costs,and trade policies.Background paper for The State of Agricultural Commodity Markets 2022.Rome,FAO.https:/doi.org/10.4060/cc3135en.Differentiating the productivity scenarios by including processed food or not makes a considerable difference by country.Looking at the global scenario,in devel

159、oped regions like Northern America or Europe,where the agro-industry sector is more developed,including the reduction in the yield gap for the ag-industry makes the initial gain increase by a much higher number than in the case of less developed regions like Africa and Asia where the level of indust

160、rialization of the agro-industry is smaller.As expected,welfare follows the same pattern as GDP with slightly higher increases but keeping the same ranking between regions.In this scenario,the world will be benefited from a 3.2percent increase in welfare.Disaggregating the results by region we can s

161、ee that Africas welfare will be 20percent higher than in the case of not reducing the yield gap,followed by Latin America and the Caribbean with 4.3percent and Asia with 2.5percent.|28|The impact of changes in the fundamental drivers of trade Productivity,trade costs,and trade policies If only sub-S

162、aharan Africa closes the gap,that subregion will have the highest returns of such a change with increases in the welfare of around 26percent.The same applies if only South-eastern Asia sees higher increases in productivity,obtaining an almost 4percent increase in welfare compared to just 0.2percent

163、for the world.Interestingly,in the case of the last two scenarios,reducing the yield gap only in a subset of countries,Latin America and the Caribbean resulted in a worse place with losses in welfare.Agricultural production increases in almost all products and regions.Expanding on this,as expected i

164、n the first scenario(Productivity-Global),the increases in production are higher than in the case of the following two scenarios related to reducing the yield gap,given the size of the shock,covering all the regions in the world.Among the eight commodity groups analysed(meat and fish,dairy and eggs,

165、fruits and vegetables,grains,sugar,processed foods,coffee and tea,and vegetable oils),the patterns are similar by region.The most significant increase at the global level can be expected in the production of coffee and tea with 33percent,followed by grains,fruits and vegetables and sugar with an inc

166、rease of around 20percent,and meat and fish,dairy and eggs,processed food and vegetable oil increasing by less than 15percent under the assumptions of the first scenario(Figure 8).In the case where only the yield gap is reduced in sub-Saharan Africa,we see a high growth rate in the production of all

167、 commodity groups(following the same ranking as in the global productivity scenario)but with a difference that production growth in other regions of the world could decline compared to the base.The third scenario follows the same patterns as the previous two scenarios,but,in this case,Asian countrie

168、s would benefit the most.However,as noted previously,the size(level of impact)in Asia is smaller than in the global or African scenarios,given that Asian countries are already closer to their potential yield.In the African and Asian scenarios,decreases in production in the regions where there are no

169、 extra productivity increases that will reduce the yield gap will be a consequence of the rise in production from the regions benefited by the increase in productivity and the impact on the reduction of prices.5.Results|29|Figure 8.Agrifood production,percentage change from baseline20020406080100120

170、WorldAfricaEastern Asia,South-eastern Asia and OceaniaSouthern AsiaWestern Asia andCentral AsiaNorthern AmericaLatin America and the CaribbeanEuropeSouth-eastern AsiaSub-Saharan AfricaProductivity-GlobalProd-Ag-GlobalProductivity-AfricaProd-Ag-AfricaProductivity-AsiaProd-Ag-AsiaPercentage changeNote

171、:Regional groups are not mutually exclusive:South-eastern Asia is a subgroup of Eastern Asia,South-eastern Asia and Oceania and sub-Saharan Africa is a subgroup of Africa.Productivity-Global:scenario in which productivity gaps are reduced by half in the world;Prod-Ag-Global:scenario in which only yi

172、eld gaps in agriculture are reduced by half in the world;Productivity-Africa:scenario in which productivity gaps are reduced by half only in sub-Saharan Africa;Prod-Ag-Africa:scenario in which only yield gaps in agriculture are reduced by half in sub-Saharan Africa;Productivity-Asia:scenario in whic

173、h productivity gaps are reduced by half only in South-eastern Asia;Prod-Ag-Asia:scenario in which only yield gaps in agriculture are reduced by half in South-eastern Asia.Source:Laborde,D.and Valeria,P.2022.The impact of changes in the fundamental drivers of trade Productivity,trade costs,and trade

174、policies.Background paper for The State of Agricultural Commodity Markets 2022.Rome,FAO.https:/doi.org/10.4060/cc3135en.Increased productivity increases production and lower food prices,leading to increased demand and food consumption.In the first scenario,world consumption of coffee and tea is proj

175、ected to increase by around 55percent.This is followed by grains with a consumption increase of 20percent,fruits and vegetables with 17percent,sugar with 16percent,dairy and eggs with almost 14percent,meat and fish and processed food with 8percent,and vegetable oils with around 6percent with respect

176、 to the base year(Figure 9).Figure 9.Agrifood consumption,percentage change from baseline 010203040WorldAfricaEastern Asia,South-eastern Asia and OceaniaSouthern AsiaWestern Asia andCentral AsiaNorthern AmericaLatin America and the CaribbeanEuropeSouth-eastern AsiaSub-Saharan AfricaProductivity-Glob

177、alProd-Ag-GlobalProductivity-AfricaProd-Ag-AfricaProductivity-AsiaProd-Ag-AsiaPercentage change Note:Regional groups are not mutually exclusive:South-eastern Asia is a subgroup of Eastern Asia,South-eastern Asia and Oceania and sub-Saharan Africa is a subgroup of Africa.Productivity-Global:a scenari

178、o in which productivity gaps are reduced by half in the world;Prod-Ag-Global:a scenario in which only yield gaps in agriculture are reduced by half in the world;Productivity-Africa:a scenario in which productivity gaps are reduced by half only in sub-Saharan Africa;Prod-Ag-Africa:a scenario in which

179、 only yield gaps in agriculture are reduced by half in sub-Saharan Africa;Productivity-Asia:a scenario in which productivity gaps are reduced by half only in South-eastern Asia;Prod-Ag-Asia:a scenario in which only yield gaps in agriculture are reduced by half in South-eastern Asia.Source:Laborde,D.

180、and Valeria,P.2022.The impact of changes in the fundamental drivers of trade Productivity,trade costs,and trade policies.Background paper for The State of Agricultural Commodity Markets 2022.Rome,FAO.https:/doi.org/10.4060/cc3135en.|30|The impact of changes in the fundamental drivers of trade Produc

181、tivity,trade costs,and trade policies Food prices,as expected given the production increases,will see a decline of a range of 15 to 34percent depending on the region for the first scenario,with smaller decreases in the case of only reducing the yield gap in sub-Saharan Africa and even less in the ca

182、se of South-eastern Asia(Table 2).The reduction of food prices and the welfare benefits are reflected in a higher food purchasing power in all regions.Table 2.Food prices,actual consumption weights Productivity-Global Prod-Ag-Global Productivity-Africa Prod-Ag-Africa Productivity-AsiaProd-Ag-AsiaWor

183、ld-14-9-3-200Africa-28-17-23-1300Eastern Asia,South-eastern Asia and Oceania-7-5-1-1-10Southern Asia-24-20-2-200Western Asia and Central Asia-20-13-2-200Northern America-12-5-1-100Latin America and the Caribbean-19-10-1-100Europe-12-7-2-100South-eastern Asia-11-7-1-1-5-3Sub-Saharan Africa-29-17-27-1

184、500Note:Regional groups are not mutually exclusive:South-eastern Asia is a subgroup of Eastern Asia,South-eastern Asia and Oceania and sub-Saharan Africa is a subgroup of Africa.Productivity-Global:a scenario in which productivity gaps are reduced by half in the world;Prod-Ag-Global:a scenario in wh

185、ich only yield gaps in agriculture are reduced by half in the world;Productivity-Africa:a scenario in which productivity gaps are reduced by half only in sub-Saharan Africa;Prod-Ag-Africa:a scenario in which only yield gaps in agriculture are reduced by half in sub-Saharan Africa;Productivity-Asia:a

186、 scenario in which productivity gaps are reduced by half only in South-eastern Asia;Prod-Ag-Asia:a scenario in which only yield gaps in agriculture are reduced by half in South-eastern Asia.Source:Laborde,D.and Valeria,P.2022.The impact of changes in the fundamental drivers of trade Productivity,tra

187、de costs,and trade policies.Background paper for The State of Agricultural Commodity Markets 2022.Rome,FAO.https:/doi.org/10.4060/cc3135en.In the productivity scenarios,the income effect dominates the price effect.This can be seen when comparing sub-Saharan Africa(food price decreased 29percent with

188、 respect to the baseline,and food purchasing power increased by 82percent)with Northern America(food price decreased 12percent with respect to the baseline,and food purchasing power increased by 15percent)in the global productivity shock scenario.When productivity increases,wages go up and hence,inc

189、ome goes up as well.The productivity increases also affect trade.When a global improvement in productivity occurs,the world benefits from an increase in the level of trade.However,we can see differences in a group of commodities.Looking at the scenario of a global reduction in the yield gap in the a

190、gricultural sector and agro-industry,coffee and tea exports increase the most,followed by meat and fish,sugar and grains.In the case of a reduction of the yield gap only in sub-Saharan Africa,all commodity groups see an increase in exports following the same pattern,that follows the comparative adva

191、ntage of the region in the different commodity groups,as the case of a global reduction on the yields,however with a minor increase in exports given that only a subset of countries observe the increase in productivity.For the last set of scenarios,in which only countries in South-eastern Asia benefi

192、t from the increase in productivity,only vegetable oils and fruits and vegetables would see an increase in exports.5.Results|31|Figure 10.Exports by commodity group,world,percentage change from baseline5060708090Meat and fshDairy and eggsFruits and vegetablesGrainsSugarProccessed foodsCof

193、fee and teaVegetable oilsProductivity-GlobalProd-Ag-GlobalProductivity-AfricaProd-Ag-AfricaProductivity-AsiaProd-Ag-AsiaPercentage changeNote:Productivity-Global:a scenario in which productivity gaps are reduced by half in the world;Prod-Ag-Global:a scenario in which only yield gaps in agriculture a

194、re reduced by half in the world;Productivity-Africa:a scenario in which productivity gaps are reduced by half only in sub-Saharan Africa;Prod-Ag-Africa:a scenario in which only yield gaps in agriculture are reduced by half in sub-Saharan Africa;Productivity-Asia:a scenario in which productivity gaps

195、 are reduced by half only in South-eastern Asia;Prod-Ag-Asia:a scenario in which only yield gaps in agriculture are reduced by half in South-eastern Asia.Source:Laborde,D.and Valeria,P.2022.The impact of changes in the fundamental drivers of trade Productivity,trade costs,and trade policies.Backgrou

196、nd paper for The State of Agricultural Commodity Markets 2022.Rome,FAO.https:/doi.org/10.4060/cc3135en.For a country,many factors can influence trade in food and agricultural products.Still,the most influential factor is comparative advantage a countrys ability to produce a particular good at a lowe

197、r opportunity cost than its trading partners.Differences in the endowments of natural resources and production factors that define production costs influence the comparative advantage of each region.The following figure shows the RCA Index 5 of sub-Saharan Africa for the base,global and African scen

198、arios.The region has a comparative advantage in coffee and tea of around 12,showing the level of specialization in that commodity group,and sees an increase of between 19 and 24 once the world or just the region reduces the current yield gap.Fruits and vegetables will also improve in their RCA in al

199、l scenarios.The commodity groups,grains,meat and fish would gain in comparative advantage in the scenario,where only sub-Saharan Africa reduces its yield gaps.5 Revealed Comparative Advantage Index(Balassa,1965).RCAij=(xij/Xit)/(xwj/Xwt).If the Balassa index for a product is more than 1,product invo

200、lves specialization.If it is less than 1,no specialization is involved in the product.|32|The impact of changes in the fundamental drivers of trade Productivity,trade costs,and trade policies Figure 11.Revealed Comparative Advantages,sub-Saharan Africa0510152025Vegetable oilsCoffee and teaProcessed

201、foodsSugarGrainsFruits and vegetablesDairy and eggsMeat and fsh0.6911.611.812.130.963.870.591.16SOCO-BaseProductivity-GlobalProd-Ag-GlobalProductivity-AfricaProd-Ag-AfricaRCA IndexNote:SOCO-Base:baseline scenario;Productivity-Global:a scenario in which productivity gaps are reduced by half in the wo

202、rld;Prod-Ag-Global:a scenario in which only yield gaps in agriculture are reduced by half in the world;Productivity-Africa:a scenario in which productivity gaps are reduced by half only in sub-Saharan Africa;Prod-Ag-Africa:scenario in which only yield gaps in agriculture are reduced by half in sub-S

203、aharan Africa.Source:Laborde,D.and Valeria,P.2022.The impact of changes in the fundamental drivers of trade Productivity,trade costs,and trade policies.Background paper for The State of Agricultural Commodity Markets 2022.Rome,FAO.https:/doi.org/10.4060/cc3135en.The RCA for South-eastern Asia that s

204、hows the level of specialization the region has per commodity group shows that South-eastern Asia is more specialized in vegetable oils,coffee and tea.In the case of a productivity shock,South-eastern Asia would increase their specialization in those two commodities.Figure 12.Revealed Comparative Ad

205、vantages,South-eastern Asia 0123456Vegetable oilsCoffee and teaProcessed foodsSugarGrainsFruits and vegetablesDairy and eggsMeat and fsh3.921.421.481.060.581.310.241.16SOCO-BaseProductivity-GlobalProd-Ag-GlobalProductivity-AsiaProd-Ag-AsiaRCA IndexNote:SOCO-Base:baseline scenario;Productivity-Global

206、:a scenario in which productivity gaps are reduced by half in the world;Prod-Ag-Global:a scenario in which only yield gaps in agriculture are reduced by half in the world;Productivity-Asia:a scenario in which productivity gaps are reduced by half only in South-eastern Asia;Prod-Ag-Asia:a scenario in

207、 which only yield gaps in agriculture are reduced by half in South-eastern Asia.Source:Laborde,D.and Valeria,P.2022.The impact of changes in the fundamental drivers of trade Productivity,trade costs,and trade policies.Background paper for The State of Agricultural Commodity Markets 2022.Rome,FAO.htt

208、ps:/doi.org/10.4060/cc3135en.5.Results|33|5.2 Improving infrastructure and institutionsA different investment strategy would be to focus on improving roads,other infrastructure projects and institutions,which we represent by imposing a reduction in transaction costs.By construction,those margins are

209、 shown by the commodity group,meaning that they may affect commodities wherever they are produced.Three scenarios are assessed.The first scenario(Infrastructure-Global),where the transport costs and NTBs are reduced by half in the world but also two more scenarios in which only one region of the wor

210、ld will have the trade costs reduced.The second scenario(Infrastructure-Africa)covers reducing the costs for only sub-Saharan Africa,while the third scenario(Infrastructure-Asia)looks at the case of South-Eastern Asia.In the case of a global improvement in infrastructure and institutions,real GDP in

211、creases in all regions of the world with a range of 0.5 and 1.8percent with respect to the base.Asia,and in particular,South-eastern Asia,are the regions that will benefit the most from improvements in trade costs.This will allow them to have better market access for their domestic production.Africa

212、 and Latin America and the Caribbean also observe an improvement in their GDP but not as big given that they face different constraints in pursuing agricultural growth(Figure 13).In the second scenario,in which trade costs are only reduced in sub-Saharan Africa,we expect similar levels of improvemen

213、t of almost a 0.5percent increase for the baseline for Africa and a 0.6percent for sub-Saharan Africa(compared to 0.4 in the case of a global reduction in trade costs).South-eastern Asia is the region that benefits the most from improvements in infrastructure and institutions,with a GDP increase of

214、2.4percent with respect to the baseline.Figure 13.Real GDP,percentage change from baseline 0123WorldAfricaEastern Asia,South-eastern Asia and OceaniaSouthern AsiaWestern Asia andCentral AsiaNorthern AmericaLatin America and the CaribbeanEuropeSouth-eastern AsiaSub-Saharan AfricaInfrastructure-Global

215、Infrastructure-AfricaInfrastructure-AsiaPercentage changeNote:Regional groups are not mutually exclusive:South-eastern Asia is a subgroup of Eastern Asia,South-eastern Asia and Oceania and sub-Saharan Africa is a subgroup of Africa.Infrastructure-Global:a scenario in which transport costs and non-ta

216、riff barriers are reduced by half in the world;Infrastructure-Africa:a scenario in which transport costs and non-tariff barriers are reduced by half only in sub-Saharan Africa;Infrastructure-Asia:a scenario in which transport costs and non-tariff barriers are reduced by half only in South-eastern As

217、ia.Source:Laborde,D.and Valeria,P.2022.The impact of changes in the fundamental drivers of trade Productivity,trade costs,and trade policies.Background paper for The State of Agricultural Commodity Markets 2022.Rome,FAO.https:/doi.org/10.4060/cc3135en.In the global scenario,where trade costs and bar

218、riers are reduced,food and agricultural production increases in South-eastern Asia by 9.3percent with respect to the base,in Latin America and the Caribbean by almost 4percent.The other regions do not see an increase in agro-food products showing the differences between regions(Figure 14).|34|The im

219、pact of changes in the fundamental drivers of trade Productivity,trade costs,and trade policies Figure 14.Agrifood production,percentage change from baseline 50510152025WorldAfricaEastern Asia,South-eastern Asia and OceaniaSouthern AsiaWestern Asia andCentral AsiaNorthern AmericaLatin America and th

220、e CaribbeanEuropeSouth-eastern AsiaSub-Saharan AfricaInfrastructure-GlobalInfrastructure-AfricaInfrastructure-AsiaPercentage changeNote:Regional groups are not mutually exclusive:South-eastern Asia is a subgroup of Eastern Asia,South-eastern Asia and Oceania and sub-Saharan Africa is a subgroup of A

221、frica.Infrastructure-Global:a scenario in which transport costs and non-tariff barriers are reduced by half in the world;Infrastructure-Africa:a scenario in which transport costs and non-tariff barriers are reduced by half only in sub-Saharan Africa;Infrastructure-Asia:a scenario in which transport

222、costs and non-tariff barriers are reduced by half only in South-eastern Asia.Source:Laborde,D.and Valeria,P.2022.The impact of changes in the fundamental drivers of trade Productivity,trade costs,and trade policies.Background paper for The State of Agricultural Commodity Markets 2022.Rome,FAO.https:

223、/doi.org/10.4060/cc3135en.Looking at food consumption,when trade costs and barriers are reduced,all regions increase their consumption levels.As a result,the world would consume 1.6percent more food products compared to the baseline and South-eastern Asia with 4.3percent,followed by the aggregate re

224、gion of Eastern and South-eastern Asia and Oceania with 2.3percent,Northern America with 1.5percent,Europe with 1.2percent and Latin America and the Caribbean with almost 1percent.(Figure 15).Figure 15.Agrifood consumption,percentage change from baseline 1012345WorldAfricaEastern Asia,South-eastern

225、Asia and OceaniaSouthern AsiaWestern Asia andCentral AsiaNorthern AmericaLatin America and the CaribbeanEuropeSouth-eastern AsiaSub-Saharan AfricaInfrastructure-GlobalInfrastructure-AfricaInfrastructure-AsiaPercentage changeNote:Regional groups are not mutually exclusive:South-eastern Asia is a subg

226、roup of Eastern Asia,South-eastern Asia and Oceania and sub-Saharan Africa is a subgroup of Africa.Infrastructure-Global:a scenario in which transport costs and non-tariff barriers are reduced by half in the world;Infrastructure-Africa:a scenario in which transport costs and non-tariff barriers are

227、reduced by half only in sub-Saharan Africa;Infrastructure-Asia:a scenario in which transport costs and non-tariff barriers are reduced by half only in South-eastern Asia.Source:Laborde,D.and Valeria,P.2022.The impact of changes in the fundamental drivers of trade Productivity,trade costs,and trade p

228、olicies.Background paper for The State of Agricultural Commodity Markets 2022.Rome,FAO.https:/doi.org/10.4060/cc3135en.5.Results|35|Trade costs include transportation,and other costs related to insurance,export and import procedures and time delays at the borders.Such costs can be influenced by the

229、distance of the markets and by domestic procedures required in trading commodities.Trade costs also inhibit the influence of comparative advantages.Terms of trade are impacted by the reduction in trade costs and barriers.In the case of a global reduction,all regions in the world see an improvement i

230、n their terms of trade,by showing a higher increase in export value relative to import value(Figure 16).If only sub-Saharan Africa reduces their costs,the benefits can be observed in the region and Africa and a minor deterioration in terms of trade of Latin America and the Caribbean,showing the incr

231、ease of imports of that region from sub-Saharan Africa.Replicating the scenario for South-eastern Asia,reducing trade costs,South-Eastern Asia and Asia would see an improvement in terms of trade and Latin America and the Caribbean a slight deterioration.For both scenarios,once the trade costs are re

232、duced in the specific region,trade patterns are modified,favoring the increase in exports from the region to the world.Figure 16.Terms of trade,percentage change from baseline 10123WorldAfricaEastern Asia,South-eastern Asia and OceaniaSouthern AsiaWestern Asia andCentral AsiaNorthern AmericaLatin Am

233、erica and the CaribbeanEuropeSouth-eastern AsiaSub-Saharan AfricaInfrastructure-GlobalInfrastructure-AfricaInfrastructure-AsiaPercentage changeNote:Regional groups are not mutually exclusive:South-eastern Asia is a subgroup of Eastern Asia,South-eastern Asia and Oceania and sub-Saharan Africa is a s

234、ubgroup of Africa.Infrastructure-Global:a scenario in which transport costs and non-tariff barriers are reduced by half in the world;Infrastructure-Africa:a scenario in which transport costs and non-tariff barriers are reduced by half only in sub-Saharan Africa;Infrastructure-Asia:a scenario in whic

235、h transport costs and non-tariff barriers are reduced by half only in South-eastern Asia.Source:Laborde,D.and Valeria,P.2022.The impact of changes in the fundamental drivers of trade Productivity,trade costs,and trade policies.Background paper for The State of Agricultural Commodity Markets 2022.Rom

236、e,FAO.https:/doi.org/10.4060/cc3135en.To conclude,South-Eastern Asia and Latin America and the Caribbean will benefit more from working towards the elimination of trade barriers,given that these regions are highly competitive but constrained by high trade costs.However,Africa will benefit more from

237、increasing agricultural productivity.|36|The impact of changes in the fundamental drivers of trade Productivity,trade costs,and trade policies 5.3 Global and regional integrationThe last set of scenarios cover deep integration scenarios.The first scenario(Integration-Global),where all transport cost

238、s,NTBs and border measures are eliminated,constitutes an illustration of a world with free trade.In two additional scenarios,only one region will have deep integration.The second scenario(Integration-Africa)illustrates the case of deep integration in only Africa,while the third scenario(Integration-

239、Asia)looks at integration in only Asia.6 Deep integration agreements have the dual benefit of improving market access through preferential tariffs and minimizing trade costs by converging domestic regulation and harmonizing NTMs.In an ideal world of deep integration and frictionless trade free of ta

240、riffs and trade costs trade flows would instead be shaped by comparative advantages that arise from differences in technology and resource endowments.In a world free of tariffs and trade costs,the global GDP would be 1.2percent higher than today.All regions in the world would observe an increase in

241、their GDP,with Asian countries seeing the highest increase starting with South-eastern Asia with 6.7percent,followed by Eastern and South-eastern Asia together with Oceania as a whole and Southern Asia with 1.9 and 1.7percent,respectively.Africa and Latin America and the Caribbean showing 1.3 and 1.

242、2percent.Regions with mostly high-income countries such as Europe and Northern America with 1 and 0.6percent increase in GDP,respectively.In the other two scenarios that illustrate regional integration of Africa and Asia,the impact on GDP is seen predominantly in their respective region.For the case

243、 of African deeper integration,a 0.14percent increase in GDP with respect to the base is seen,while for the Asian deeper integration scenario a 1percent increase in the GDP for the region including Eastern and South-eastern Asia and Oceania could be obtained.Figure 17.Real GDP,percentage change from

244、 baseline 02468WorldAfricaEastern Asia,South-eastern Asia and OceaniaSouthern AsiaWestern Asia andCentral AsiaNorthern AmericaLatin America and the CaribbeanEuropeSouth-eastern AsiaSub-Saharan AfricaInfrastructure-GlobalInfrastructure-AfricaInfrastructure-AsiaPercentage changeNote:Regional groups ar

245、e not mutually exclusive:South-eastern Asia is a subgroup of Eastern Asia,South-eastern Asia and Oceania and sub-Saharan Africa is a subgroup of Africa.Integration-Global:a scenario in which all transport costs,non-tariff barriers and border measures are eliminated in the world;Integration-Africa:a

246、scenario in which all transport costs,non-tariff barriers and border measures are eliminated in sub-Saharan Africa;Integration-Asia:a scenario in which all transport costs,non-tariff barriers and border measures are eliminated in South-eastern Asia.Source:Laborde,D.and Valeria,P.2022.The impact of c

247、hanges in the fundamental drivers of trade Productivity,trade costs,and trade policies.Background paper for The State of Agricultural Commodity Markets 2022.Rome,FAO.https:/doi.org/10.4060/cc3135en.6 The second scenario(Integration-Africa)can be seen as an illustration of the AfCFTA while the third

248、scenario(Integration-Asia)is inspired by the RCEP.5.Results|37|Reducing tariffs mitigates the“loss of efficiency”costs generated by the distortions created by the tariff and could generate a positive incentive to expand the market,allowing producers in exporting countries to take advantage of econom

249、ies of scale while expanding their production.World agricultural production is higher in the case of free trade.However,when examining each region,we can see that production in Eastern and South-eastern Asia and Oceania(12percent),driven by South-eastern Asia(74percent),and Latin-America and the Car

250、ibbean(8.6percent)increased,while this is not the case in the other regions.Regions that are already competitive can take advantage of better market access to other regions by increasing the production of agricultural goods.As distortions decrease,food prices decrease between 5percent in Africa and

251、17percent in Europe,translating into an increase in the food purchasing power of almost 8percent in Africa and 30percent in South-eastern Asia.Figure 18.Agrifood production,percentage change from baseline 50607080WorldAfricaEastern Asia,South-eastern Asia and OceaniaSouthern AsiaWestern A

252、sia andCentral AsiaNorthern AmericaLatin America and the CaribbeanEuropeSouth-eastern AsiaSub-Saharan AfricaInfrastructure-GlobalInfrastructure-AfricaInfrastructure-AsiaPercentage changeNote:Regional groups are not mutually exclusive:South-eastern Asia is a subgroup of Eastern Asia,South-eastern Asi

253、a and Oceania and sub-Saharan Africa is a subgroup of Africa.Integration-Global:a scenario in which all transport costs,non-tariff barriers and border measures are eliminated in the world;Integration-Africa:a scenario in which all transport costs,non-tariff barriers and border measures are eliminate

254、d in sub-Saharan Africa;Integration-Asia:a scenario in which all transport costs,non-tariff barriers and border measures are eliminated in South-eastern Asia.Source:Laborde,D.and Valeria,P.2022.The impact of changes in the fundamental drivers of trade Productivity,trade costs,and trade policies.Back

255、ground paper for The State of Agricultural Commodity Markets 2022.Rome,FAO.https:/doi.org/10.4060/cc3135en.In the case of a global trade integration scenario,agricultural consumption sees an increase in all regions taking advantage of the lower food prices and higher food purchasing power.Suppose Af

256、rica eliminates tariffs,NTBs and trade costs inside the region,the consumption in African countries would increase by 0.4percent.If the same is applied to Asia,their consumption would increase by 5percent.|38|The impact of changes in the fundamental drivers of trade Productivity,trade costs,and trad

257、e policies Figure 19.Agrifood consumption,percentage change from baseline 505101520WorldAfricaEastern Asia,South-eastern Asia and OceaniaSouthern AsiaWestern Asia andCentral AsiaNorthern AmericaLatin America and the CaribbeanEuropeSouth-eastern AsiaSub-Saharan AfricaInfrastructure-GlobalInfrastructu

258、re-AfricaInfrastructure-AsiaPercentage changeNote:Regional groups are not mutually exclusive:South-eastern Asia is a subgroup of Eastern Asia,South-eastern Asia and Oceania and sub-Saharan Africa is a subgroup of Africa.Integration-Global:a scenario in which all transport costs,non-tariff barriers a

259、nd border measures are eliminated in the world;Integration-Africa:a scenario in which all transport costs,non-tariff barriers and border measures are eliminated in sub-Saharan Africa;Integration-Asia:a scenario in which all transport costs,non-tariff barriers and border measures are eliminated in So

260、uth-eastern Asia.Source:Laborde,D.and Valeria,P.2022.The impact of changes in the fundamental drivers of trade Productivity,trade costs,and trade policies.Background paper for The State of Agricultural Commodity Markets 2022.Rome,FAO.https:/doi.org/10.4060/cc3135en.It is worth noting that Africa see

261、s an improvement in trade in the three scenarios,even the one that only refers to deeper integration in Asia.Latin America and the Caribbean sees a gain of almost 5.5percent in the case of global integration,nearly no change in the case of African deep integration and a deterioration of its terms of

262、 trade of 0.5percent in the case of the Asian deeper integration.This suggests that there is some competition in the international markets of food products with Asia but not Africa and lower levels of food consumption in Africa compared to other regions.Figure 20.Terms of trade,percentage change fro

263、m baseline 420246WorldAfricaEastern Asia,South-eastern Asia and OceaniaSouthern AsiaWestern Asia andCentral AsiaNorthern AmericaLatin America and the CaribbeanEuropeSouth-eastern AsiaSub-Saharan AfricaInfrastructure-GlobalInfrastructure-AfricaInfrastructure-AsiaPercentage changeNote:Regional groups

264、are not mutually exclusive:South-eastern Asia is a subgroup of Eastern Asia,South-eastern Asia and Oceania and sub-Saharan Africa is a subgroup of Africa.Integration-Global:a scenario in which all transport costs,non-tariff barriers and border measures are eliminated in the world;Integration-Africa:

265、a scenario in which all transport costs,non-tariff barriers and border measures are eliminated in sub-Saharan Africa;Integration-Asia:a scenario in which all transport costs,non-tariff barriers and border measures are eliminated in South-eastern Asia.Source:Laborde,D.and Valeria,P.2022.The impact of

266、 changes in the fundamental drivers of trade Productivity,trade costs,and trade policies.Background paper for The State of Agricultural Commodity Markets 2022.Rome,FAO.https:/doi.org/10.4060/cc3135en.5.Results|39|To analyse the possible concentration of exports by region,we calculated the Export Div

267、ersification Index(EDI)7,which measures,for each product group,the degree of export market concentration by region of origin.Latin America and the Caribbean and Africa display levels of export concentration higher than other regions in the base year.The causes of the lack of export diversification a

268、re different for these two regions.In the case of Africa,the lack of export diversification is due to persistent challenges around structural economic transformation,including slow productivity growth and limited advancement in technology and industrialization,while in Latin America and the Caribbea

269、n,it is due to the specialization in commodity exports.Latin America and the Caribbean is the region with the highest EDI,0.4 in the base(today)and reflects the pattern of the previous variables explained in this section(production,consumption,and terms of trade).EDI increases in the case of a world

270、 with free trade,does not change much in the case of deeper African integration and decreases if a deeper Asian integration is fulfilled.Africa would see an increase in export diversification in the case of deep global integration and Africas deeper integration.The same would result for Asia in the

271、case of a global free trade scenario and the Asian deeper integration.Northern America and Europe see an increase in their EDI in the case of a free trade world,no changes in the African scenario and an increase in the index of export diversification in the case of an Asian deep integration scenario

272、,showing the second-round effect of the improvement in the level of consumption and food purchasing power in Asia.Figure 21.Export diversification index00,10,20,30,40,5AfricaEastern Asia,South-eastern Asia and OceaniaSouthern AsiaWestern Asia andCentral AsiaNorthern AmericaLatin America and the Cari

273、bbeanEuropeSouth-eastern AsiaSub-Saharan AfricaInfrastructure-GlobalInfrastructure-AfricaInfrastructure-AsiaPercentage changeNote:Regional groups are not mutually exclusive:South-eastern Asia is a subgroup of Eastern Asia,South-eastern Asia and Oceania and sub-Saharan Africa is a subgroup of Africa.

274、SOCO-Base:a baseline scenario;Integration-Global:a scenario in which all transport costs,non-tariff barriers and border measures are eliminated in the world;Integration-Africa:a scenario in which all transport costs,non-tariff barriers and border measures are eliminated in sub-Saharan Africa;Integra

275、tion-Asia:a scenario in which all transport costs,non-tariff barriers and border measures are eliminated in South-eastern Asia.Source:Laborde,D.and Valeria,P.2022.The impact of changes in the fundamental drivers of trade Productivity,trade costs,and trade policies.Background paper for The State of A

276、gricultural Commodity Markets 2022.Rome,FAO.https:/doi.org/10.4060/cc3135en.7 The export diversification(EDI)index for a country is defined as:EDIj=(sum|hij xi|)/2.Where hij is the share of commodity,i in the total exports of country j and hi is the share of the commodity in world exports.The lower

277、the index,the less concentrated are a countrys exports.|40|The impact of changes in the fundamental drivers of trade Productivity,trade costs,and trade policies Last,we computed the TCI 8 to measure the degree to which one regions export pattern matches anothers import pattern.This index can be used

278、 as an indicator in evaluating the possibility of successful trade agreements in the case of the existence of a high degree of complementarity.The following figures zoom in on the two regions of focus,Africa and Asia.The first one shows the TCI for Africa in the three scenarios of this section of th

279、e report.In this regard,trade complementarity would show how the composition of Africas export supply matches or mismatches the other regions import demand.If Africas export supply matches with a regions import demand,complementarity exists and there would be opportunities for Africas exports to inc

280、rease to that region.If there is a mismatch,it implies absence of complementarity,and there would be low opportunities for Africas exports to that region.Table 3 shows a match between Africas exports supply and the worlds imports demand regions as the indices set between 60 and 89.The higher the val

281、ue of the index toward 100,the higher the adequacy of Africas export supply in meeting a regions import demand.The result from the trade complementarity index shows that when there is a deeper integration in Africa,the complementarity increases with only Latin America and the Caribbean.However,it is

282、 important to note that the initial trade complementarity between Africa and Latin America and the Caribbean was the lowest.Table 3.Trade complementarity index,AfricaSOCO-BaseIntegration-GlobalIntegration-AfricaIntegration-AsiaEastern Asia,South-eastern Asia and Oceania86868188Northern America898885

283、87Latin America and the Caribbean65606969Europe89868487Note:SOCO-Base:baseline scenario;Integration-Global:scenario in which all transport costs,non-tariff barriers and border measures are eliminated in the world;Integration-Africa:a scenario in which all transport costs,non-tariff barriers and bord

284、er measures are eliminated in sub-Saharan Africa;Integration-Asia:a scenario in which all transport costs,non-tariff barriers and border measures are eliminated in South-eastern Asia.Source:Laborde,D.and Valeria,P.2022.The impact of changes in the fundamental drivers of trade Productivity,trade cost

285、s,and trade policies.Background paper for The State of Agricultural Commodity Markets 2022.Rome,FAO.https:/doi.org/10.4060/cc3135en.Looking at Asia,we can see that Asias complementarity with other regions does not change in the case of deeper integration in Africa.This scenario would not create oppo

286、rtunities for Asian exports to increase to that region.However,in the case of an Asian integration scenario,TCI increases for Africa and Latin America and the Caribbean,and deeper integration in Asia would create opportunities for their exports to other regions,given the increase in efficiency.(Tabl

287、e 4).8 TC between countries k and j is defined as:TCij=100(1 sum(|mik xij|/2).Where xij is the share of good i in global exports of country j and mik is the share of good i in all imports of country k.The index is zero when no goods are exported by one country or imported by the other and 100 when t

288、he export and import shares exactly match.5.Results|41|Table 4.Trade complementarity index,AsiaSOCO-BaseIntegration-GlobalIntegration-AfricaIntegration-AsiaAfrica75716879Northern America93879377Latin America and the Caribbean62596272Europe93869377Note:SOCO-Base:baseline scenario;Integration-Global:s

289、cenario in which all transport costs,non-tariff barriers and border measures are eliminated in the world;Integration-Africa:a scenario in which all transport costs,non-tariff barriers and border measures are eliminated in sub-Saharan Africa;Integration-Asia:a scenario in which all transport costs,no

290、n-tariff barriers and border measures are eliminated in South-eastern Asia.Source:Laborde,D.and Valeria,P.2022.The impact of changes in the fundamental drivers of trade Productivity,trade costs,and trade policies.Background paper for The State of Agricultural Commodity Markets 2022.Rome,FAO.https:/d

291、oi.org/10.4060/cc3135en.CHAPTER 6Conclusions|45|The impact of changes in the fundamental drivers of trade Productivity,trade costs,and trade policies|45|6 ConclusionsThe 2022 crisis has highlighted the importance of diversification in dealing with the increased level of risk in the current world.Tra

292、de tensions,COVID-19,increasing natural disasters and conflict create problems in logistics and trade,impacting the accessibility and affordability of inputs and food products,translating into more volatility in the markets and the implementation of domestic policies that may reinforce higher world

293、prices.This is the time to think about the possible paths to transform the agrifood system.This paper analysed three different paths,and even though we looked at them separately,they should not be seen as stand-alone ones.Policies driving agricultural productivity growth such as investments in resea

294、rch and development,economic reforms that strengthen incentives for farmers,rural education and extension,and improved infrastructure have been shown to reduce the yield gap.It is also important to think about improving productivity growth while addressing the concerns for food security and sustaina

295、bility and the resilience of the agrifood system.To strengthen their resilience and ensure food security and healthy diets,countries should aim to diversify the products they import and increase the number of their trading partners.Policies should aim to improve agricultural productivity and reduce

296、trade costs to reap the benefits of trade.Measures taken to increase trade integration in Africa and Asia will be important for economic growth and development in these regions.Lower trade costs will make a country more open to trade and let comparative advantage play out,resulting in gains from tra

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