May 8, 2013 Report No：13-02
The Double Dividend of Agricultural Trade Liberalization: Consistency between National Food Security and Gains from Trade
National food security is one of the main justifications used to oppose agricultural trade liberalization in Japan. Opponents of agricultural trade liberalization argue that because food supply is subject to various uncertainties, importation of cheap foods is too risky a policy. We used a Monte Carlo simulation to perform a computable general equilibrium analysis and investigated the impact of trade liberalization on national food security with random productivity shocks in four major crop markets, such as rice and wheat. Our results indicate that not only would the level of welfare be improved but also its fluctuations would be reduced by trade liberalization of rice, which shows almost perfect self-sufficiency, and by that of other crops whose supply depends heavily on importation. This double dividend would be obtained even when we focused on the cases of extremely poor crops yields.
|Keywords||National food security; agricultural trade liberalization; productivity shocks; computable general equilibrium analysis; Monte Carlo simulation; double dividend|