Agriculture Reference
In-Depth Information
'Export promotng effects' and 'substtuton effects from mports'
The logc and the analytcal technque used for the analyss are smple.
The hstorcal performance of Chna's agrcultural trade ndcates that WTO
accesson s lkely to strengthen the tendency for mports of land-ntensve
agricultural products on the one hand, and encourage exports of labour-
intensive agricultural products on the other. In other words, WTO accession
will likely produce two trade flow effects. One is the positive export-
promotng effect and the other s the negatve substtuton effect from the
growth in imports. As regards the pattern of export promoting effects, it may
lnk closely to the domestc dstrbuton of comparatve advantage for labour-
ntensve agrcultural products. Those regons wth comparatve advantage
in labour-intensive agricultural products are likely to benefit more from the
potential export expansion effects of the WTO accession, and vice versa.
The regonal pattern of substtuton effects wll depend upon how
domestic production of land-intensive products is substituted. From an
analytcal pont of vew there are at least two possbltes. One possblty s
based on an assumpton that growng mports of land-ntensve agrcultural
products wll largely substtute for domestc producton of these products
n the regons wth relatvely hgh producton costs for these products.
So those provnces wth relatve domestc advantage n land-ntensve
agrcultural products may ncur relatvely small adjustment costs from
the possible import surge effects, and vice versa. Alternatively, it may
be assumed that growng mports of land-ntensve agrcultural products
wll substtute for domestc producton of these products n proporton to
the relatve concentraton of the producton across the regons. The two
assumptons have dfferent mplcatons for the regonal dstrbuton of the
substtuton effects and the adjustment costs.
Regonal producton concentraton ndces for major agrcultural
products
To examine the regional pattern of trade flow impacts on China's agricultural
sector resulting from WTO accession, we need to know the regional
dstrbuton of comparatve advantage of the two categores of agrcultural
products. On the basis of economic principles, a product or a production
