Impact of farm protectionism on the use of agricultural inputs in Chile

Gabriel Pino, Ariel Soto-Caro


Despite evidence highlighting the multiple benefits that liberalization can have in the agricultural sector, agricultural protectionism is abundant, especially in developing countries. Chile provides an interesting case on this topic because it implemented an aggressive liberalization in the agricultural sector during the 1970s and 1980s. This paper analyzes the impact of farm protectionism on the use of agricultural inputs in Chile. To do this, we estimated partial elasticities of substitution by incorporating government protectionism as a factor for agricultural production. Our findings reveal that increased protectionism decreases agricultural labor and promotes the use of fixed capital. In contrast, protectionism has no effect on the use of working capital and land. This information shows a clear transference from the government to farmers. Furthermore, our results are useful for anticipating the effects that varying levels of government protectionism can have on the Chilean agricultural sector over time.


government assistance; agriculture; elasticity of substitution

Full Text:



Ahmed R, 1995. Liberalization of agricultural input markets in Bangladesh: Process, impact, and lessons. Agr Econ 12: 115-128.

Ahmed R, 1996. Agricultural market reforms in South Asia. Am J Agr Econ 78: 815-819.

Anderson K, 1992. Agricultural trade liberalisation and the environment: a global perspective. World Econ 15: 153-172.

Anderson K, Nelgen S, 2011. What's the appropriate agricultural protection counterfactual for trade analysis? In: Unfinished business? The WTO’s Doha development agenda; Martin W, Mattoo A (eds.). pp: 325-354. World Bank, Washington DC.

Anderson K, Nelgen S, 2012. Trade barrier volatility and agricultural price stabilization. World Dev 40: 36-48.

Anderson K, Rausser G, Swinnen J, 2013. Political economy of public policies: insights from distortions to agricultural and food markets. J Econ Lit 51: 423-477.

Anowor OF, Ukweni NO, Martins I, 2013. The impact of trade liberalisation on Nigeria agricultural sector. J Econ Sust Dev 4: 14-24.

Barten A, 1969. Maximum likelihood estimation of a complete system of demand equations. Eur Econ Rev 1: 7-73.

Behrman J, 1972. Sectoral elasticities of substitution between capital and labor in a developing economy: times series analysis in the case of postwar Chile. Econometrica 40: 311-326.

Berndt E, Wood D, 1975. Technology, prices, and the derived demand for energy. Rev Econ Stat 57: 259-268.

Binswanger H, Deininger K, 1997. Explaining agricultural and agrarian policies in developing countries. J Econ Lit 35: 1958-2005.

Boot JCG, Van Der Zee F, 1993. The political economy of agricultural policies: A survey. Eur Rev Agr Econ 20: 261-290.

Bouët A, Bureau JC, Decreux Y, Jean S, 2005. Multilateral agricultural trade liberalisation: The contrasting fortunes of developing countries in the Doha round. World Econ 28: 1329-1354.

Cavallo D, Mundlak Y, 1982. Agriculture and economic growth in an open economy: The case of Argentina. Intl Food Policy Res Inst, Washington DC.

Chiquiar D, Hanson GH, 2005. International migration, self-selection, and the distribution of wages: Evidence from Mexico and the United States. J Polit Econ 113: 239-281.

De Albuquerque M, Dirven M, Vogelgesang F, 2000. The impact of the new economic model on Latin America's agriculture. World Dev 28: 1673-1688.

Dibden J, Potter C, Cocklin C, 2009. Contesting the neoliberal project for agriculture: Productivist and multifunctional trajectories in the European Union and Australia. J Rural Stud 25: 299-308.

Diewert W, 1974. Applications of duality theory in frontiers of quantitative economics. American Elsevier.

Duguet E, MacGarvie, 2005. How well do patent citations measure flows of technology? Evidence from French innovation surveys. Econ Inn New Tech 14: 375-393.

Giannakas K, Schoney R, Tzouvelekas V, 2001. Technical efficiency, technological change and output growth of wheat farms in Saskatchewan. Can J Agr Econ 49: 135-152.

Gibbon P, 1999. Free competition without sustainable development? Tanzanian cotton sector liberalisation, 1994/95 to 1997/98. J Dev Stud 36: 128-150.

Guan Z, Lansink AO, 2006. The source of productivity growth in Dutch agriculture: A perspective from finance. Am J Agr Econ 88: 644-656.

Hadley D, 2006. Patterns in technical efficiency and technical change at the farm-level in England and Wales, 1982-2002. J Agr Econ 57: 81-100.

Henessy D, 1998. The production effects of agricultural income policies under uncertainty. Am J Agr Econ 80: 46-57.

Hertel T, Keeney R, 2006. What's at stake: The relative importance of import barriers, export subsidies and domestic support. In: Agricultural trade reform and the Doha development agenda; Anderson, Martin (eds.). World Bank, Washington DC.

Hollander S, 1992. Malthus's abandonment of agricultural protectionism: a discovery in the history of economic thought. Am Econ Rev 82: 650-659.

Ingco M, Nash J, 2004. Agriculture and the WTO: creating a trading system for development. World Bank, Washington DC.

Jayne TS, Govereh J, Mwanaumo A, Nyoro JK, Chapoto A, 2002. False promise or false premise? The experience of food and input market reform in Eastern and Southern Africa. World Dev 30: 1967-1985.

Karagiannis G, Sarris A, 2005. Measuring and explaining scale efficiency with the parametric approach: the case of Greek tobacco growers. Agr Econ 33: 441-451.

Kuroda Y, 1997. Research and extension expenditures and productivity in Japanese agriculture, 1960-1990. Agr Econ 16: 111-124.

Larrain F, 1982. Proteccionismo y desarrollo económico. Estudios Públicos 7: 61-75.

Lederman D, Maloney WF, Servén L, 2004. Lessons from NAFTA: for Latin America and the Caribbean. World Bank, Washington DC.

Lusk J, 2012. The political ideology of food. Food Policy 37: 530-542.

McCalla A, 2003. Liberalizing agricultural trade: will it ever be a reality? J Agr Resour Econ 28: 419-434.

McCloud N, Kumbhakar S, 2008. Do subsidies drive productivity? A cross-country analysis of Nordic dairy farms. In: Advances in econometrics: Bayesian econometrics; Chib S, Griffiths W, Koop G, Terrell D (eds), Vol 23, pp: 245–274. Emerald Group Publ Ltd.

Ministry of Economy of Chile, 2012. Séptima Encuesta Nacional de Innovación de las Empresas. Departamento de Investigación y Desarrollo, Instituto Nacional de Estadísticas, Chile.

Moon W, Griffith J, 2011. Assessing holistic economic value for multifunctional agriculture in the US. Food Policy 36: 455-465.

Moon W, Pino G, 2018. Do US citizens support government intervention in agriculture? Implications for the political economy of agricultural protection. Agr Econ 49: 119-129.

Morandé F, Soto R, 1992. Una nota sobre la construcción de series de precios de activos reales: tierra y casas en Chile (1976-1989). Rev An Econ 7: 169-177.

Naoi M, Kume I, 2011. Explaining mass support for agricultural protectionism: evidence from a survey experiment during the global recession. Int Organ 65: 771-795.

ODEPA, 2013. Chilean agriculture overview. Office of Agricultural Policies, Trade and Information, Ministry of Agriculture, Chile.

Panagariya A, 2005. Agricultural liberalisation and the least developed countries: six fallacies. World Econ 28: 1277-1299.

Rafeek MIM, Samaratunga PA, 2000. Trade liberalisation and its impact on the rice sector of Sri Lanka. Sri Lankan J Agr Econ 3: 143-154.

Sharma S, 1991. Technological change and elasticities of substitution in Korean agriculture. J Dev Econ 35: 147-172.

Suhariyanto K, Colin T, 2001. Asian agricultural productivity and convergence. J Agr Econ 52: 96-110.

Swinnen J, 1994. A positive theory of agricultural protection. Am J Agr Econ 76: 1-14.

Swinnen J, 2010. The political economy of agricultural and food policies: recent contributions, new insights, and areas for further research. Appl Econ Perspect P 32: 33-58.

Tobar P, 2003. Evolución del precio de la tierra y de la rentabilidad de la agricultura chilena entre el período 1983 y 2002. Doctoral Thesis. Universidad de Talca, Facultad de Cs. Agrarias, Talca, Chile.

Valdés A, 1993. Mix and sequencing of economy wide and agricultural reforms: Chile and New Zealand. J Agr Econ 8: 295-311.

DOI: 10.5424/sjar/2019171-13696