Economic development, institutional change, and the political economy of agricultural protection: an econometric study of Belgium since the 19th century

Swinnen, Johan F.M., Banerjee, Anurag N. and De Gorter, Harry (2001) Economic development, institutional change, and the political economy of agricultural protection: an econometric study of Belgium since the 19th century. Agricultural Economics, 26 (1), 25-43. (doi:10.1016/S0169-5150(00)00097-9).

Abstract

This empirical study uses 100 years of annual data on 11 agricultural commodities from Belgium to measure the impact of structural changes coinciding with economic development and changes in political institutions on agricultural protection. The analysis shows that changes in agricultural protection are caused by a combination of factors. Governments have increased protection and support to farmers when world market prices for their commodities fell, and vice versa, offsetting market effects on producer incomes. Other economic determinants were the share of the commodities in total consumer expenditures (negative effect) and in total output of the economy (positive effect). With Belgium a small economy, there was no impact of the trade position. Changes in political institutions have affected agricultural protection. Democratic reforms which induced a significant shift in the political balance towards agricultural interests, such as the introduction of the one-man-one-vote system, led to an increase in agricultural protection. The integration of Belgian agricultural policies in the Common Agricultural Policy in 1968 coincided with an increase in protection, ceteris paribus. Both institutional factors, related to changes in access to and information about the decision-making at the EU level, and structural changes in the agricultural and food economy may explain this effect.

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