Export subsidies and global trade

Stages of development

Reflecting on Rostow’s stages of economic growth, one realizes that economic development starts with agriculture.  The traditional society in Rostow’s theory was primarily agricultural.  If one accepts the logic of Rostow’s thinking on the economic evolution of societies, then one notices that agriculture was rather conspicuous in at least two of his later stages of growth, namely the pre-conditions for take-off and even the phase of take-off itself. But when one looks at large and advanced economies like those of the USA, France and Germany, which could be placed at the end stage of Rostow’s theory, they never abandoned their agricultural sector.  Instead, they did things to strengthen it and where domestic markets had become saturated or were too small to support the technological expansion of agriculture, they sought foreign markets.  Advanced countries used a complex of policies to support agricultural expansion, but one that has riled the international community was the use of export subsidies with impunity to satisfy domestic objectives.  Today, before many countries could advance to the take-off stage of Rostow’s theory, the use of export subsidies in agriculture is being disallowed.  This article examines ….