Social and Behavioral Sciences Commons^™

Interventions And Production Sector Waste In Ldc Agriculture, Lilyan E. Fulginiti, Richard K. Perrin

Department of Agricultural Economics: Faculty Publications

Recent studies have revealed that less developed countries (LDCs) have been taxing their agricultural sectors at rates of 40-50%. This study uses quantity-based general equilibrium measures of deadweight loss to evaluate the cost of these distortions in 18 of these countries. The Allais-Debreu loss measures indicate that from 7–16% of either output or of the agricultural resource base has been wasted due to the associated misallocation of agricultural inputs across these countries. Agriculture is heavily taxed in less developed countries (LDCs), with combined direct and indirect tax rates of 40 to 50% being common. These levels of intervention surely have …