SEARCHING UNDER THE LIGHT: THE NEGLECT OF GENERAL EQUILIBRIUM, DYNAMICS AND RISK IN THE ANALYSIS OF FOOD TRADE REFORMS

The substantial investment in models of international food markets immediately prior to and during the Uruguay Round of international trade negotiations has been a mixed blessing so far as the prospects for reform are concerned. At worst, results from these models have mislead the negotiations, first because they have served the losers from reform better than the gainers and second, because they have tended not to address a primary concern lending domestic political support to food market interventions, namely the avoidance of risks borne of dependence on international markets. The paper reviews some errors which have stemmed from the application of 'standard' but inappropriate models and examines the implications of extending the standard methodology to include dynamic behavior and market insulating policies.