This is the summary conclusion of an 18-country World Bank study of price
and other policy interventions in agriculture for the period 1960-85.
Conventional wisdom in the 1960s and 1970s was that promoting industry
at the expense of agriculture would sacrifice little in overall output. The
countries studied spanned all levels of intervention from extreme to low
bias against agriculture. Interventions were direct through agricultural sec-
tor policies (price controls, export taxes or quotas, import subsidies or
taxes, etc.) or indirect through macroeconomic policies and industrial pro-
tection.
The indirect policies were the most repressive, causing an average reduction
in agricultural prices of 22 percent. Direct intervention caused an addi-
tional depression of 8 percent with a total negative effect of 30 percent, cer-
tainly not an environment for growth as confirmed by those countries in the
high total bias group which displayed agricultural growth rates only one
half those of the low bias group (2.7 percent versus 5.2 percent).
Since the mid-1980s, there has been a profound change in economic devel-
opment strategies - with a movement toward more open economies (and) a
shift in thinking about the role of the state in general (leading to) market
and trade liberalisation (and) consequently the bias against agriculture has
fallen significantly in many countries.