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The Political Economy of Commodity Export Policy : A Case Study of India

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dc.contributor.authorKondo, Masanori
dc.date.accessioned2014-08-19T16:12:34Z
dc.date.available2014-08-19T16:12:34Z
dc.date.issued2001-12
dc.description.abstractMany developing country governments discriminate against sectors that export primary commodities. India, for example, discriminates against cotton production. Exports of cotton have been restricted by quotas, and the mill industry has been subject to such regulations as the obligation to supply hank yarn for Indian handlooms. These interventions have led to stagnating cotton yields, rent-seeking activities, manipulation of cotton statistics, and low profitability in cotton mills' offsetting the short-run benefits of inexpensive cotton in India. The author develops a numerical model to measure the impact of liberalizing cotton exports. This is the first simulation model of its type, and the first multimarket model that computes price elasticities endogenously, based on the ratios between product prices and input costs. The model distinguishes short-run from long-run effects by drawing on the principle that the cost of capital varies only in the long run. Results of the simulation under complete liberalization indicate heavy (16 percent) net losses in income in the handloom sector. The government subsidies needed to compensate for those losses amount to US$423 million, or about 25 percent more than current government revenue in India's cotton sector. Such costly subsidy of handlooms is undesirable not only budgetarily but also politically, because it creates new vested interests. The author proposes politically feasible programs for managing the adverse impact of liberalization on the handloom sector, including handloom conversion and involvement of mills in cotton cultivation. Governments tend to prefer an export quota to an export tax because it is easier to change a quota than a tax rate if market conditions change. But flexible controls actually facilitate rent-seeking activities. As quotas are changed more often than tax rates, more interest groups get involved in lobbying and in padding crop estimates. In other words, the political and economic problems that result from restrictions on commodity exports can be more serious than those relating to resource misallocation. It is important to consider how policy changes will affect the political power structure and the objectives of different interest groups.en
dc.identifierhttp://documents.worldbank.org/curated/en/2001/12/1671298/political-economy-commodity-export-policy-case-study-india
dc.identifier.doi10.1596/1813-9450-2750
dc.identifier.urihttps://hdl.handle.net/10986/19411
dc.languageEnglish
dc.language.isoen_US
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Paper;No. 2750
dc.rightsCC BY 3.0 IGO
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectAGRICULTURAL PRICING POLICIES
dc.subjectAGRICULTURAL TRADE
dc.subjectAGRICULTURE
dc.subjectCAPITAL GOODS
dc.subjectCHEMICAL INDUSTRY
dc.subjectCOMMODITIES
dc.subjectCOMMODITY
dc.subjectCOTTON
dc.subjectCOTTON CULTIVATION
dc.subjectCOTTON MARKETING
dc.subjectCOTTON PRICES
dc.subjectCOTTON PRODUCTION
dc.subjectCOTTON SECTOR
dc.subjectCOTTON SEEDS
dc.subjectCOTTON SPINNING
dc.subjectCOTTON TEXTILE INDUSTRY
dc.subjectCOTTON TEXTILES
dc.subjectCOTTON YARN
dc.subjectCROP
dc.subjectCROPS
dc.subjectCULTIVATED LAND
dc.subjectDECISION MAKING
dc.subjectDEREGULATION
dc.subjectECONOMIC GROWTH
dc.subjectECONOMIC LIBERALIZATION
dc.subjectECONOMIC PROBLEMS
dc.subjectECONOMIC RENTS
dc.subjectEMPIRICAL STUDIES
dc.subjectEMPLOYMENT
dc.subjectENTITLEMENTS
dc.subjectFARMER
dc.subjectFARMERS
dc.subjectFERTILIZER
dc.subjectFERTILIZER SUBSIDIES
dc.subjectFERTILIZERS
dc.subjectFIBRE
dc.subjectGOVERNMENT REGULATIONS
dc.subjectIMPORTS
dc.subjectINCOME
dc.subjectINCOME DISTRIBUTION
dc.subjectINTERMEDIATE GOODS
dc.subjectIRRIGATION
dc.subjectLOOMS
dc.subjectMILL
dc.subjectNATURAL RESOURCES
dc.subjectPOLITICAL ECONOMY
dc.subjectPRICE ELASTICITIES
dc.subjectPRODUCE
dc.subjectPRODUCTION OF COTTON
dc.subjectQUOTAS
dc.subjectRURAL DEVELOPMENT
dc.subjectSPINNING
dc.subjectSPUN YARN
dc.subjectTAX RATES
dc.subjectTAXATION
dc.subjectTEXTILE INDUSTRY
dc.subjectTEXTILE MACHINERY
dc.subjectTEXTILE MACHINERY INDUSTRY
dc.subjectTEXTILE MILLS
dc.subjectTRADE LIBERALIZATION
dc.subjectWAGES
dc.subjectWEAVING
dc.subjectYARN
dc.subjectYIELDS COMMODITIES
dc.subjectEXPORT POLICY
dc.subjectCOTTON INDUSTRY
dc.subjectCOTTON YARN
dc.subjectCOTTON PRODUCTION
dc.subjectTRADE LIBERALIZATION
dc.subjectPRICE ELASTICITY
dc.subjectHANDLOOM INDUSTRY
dc.subjectSUBSIDIES
dc.subjectEXPORT TAXES
dc.subjectINTEREST GROUPS
dc.subjectPOLITICAL POWER
dc.titleThe Political Economy of Commodity Export Policy : A Case Study of Indiaen
dspace.entity.typePublication
okr.crossref.titleThe Political Economy of Commodity Export Policy: A Case Study of India
okr.date.disclosure2001-12-30
okr.date.doiregistration2025-04-10T07:20:11.592883Z
okr.doctypePublications & Research::Policy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/2001/12/1671298/political-economy-commodity-export-policy-case-study-india
okr.globalpracticeAgriculture
okr.guid408611468771599630
okr.identifier.doi10.1596/1813-9450-2750
okr.identifier.externaldocumentum000094946_02011904015780
okr.identifier.internaldocumentum1671298
okr.identifier.reportWPS2750
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2002/02/02/000094946_02011904015780/Rendered/PDF/multi0page.pdfen
okr.region.administrativeSouth Asia
okr.region.countryIndia
okr.sectorTrade
okr.topicTextiles
okr.topicApparel and Leather Industry
okr.topicEconomic Theory and Research
okr.topicAgriculture::Agricultural Research
okr.topicEnvironmental Economics and Policies
okr.topicLivestock and Animal Husbandry
okr.topicCrops and Crop Management Systems
okr.unitRural Development Sector Unit, South Asia Region
okr.volume1
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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