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European Review of Agricultural Economics Advance Access originally published online on March 25, 2009
European Review of Agricultural Economics 2009 36(1):1-29; doi:10.1093/erae/jbp002
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© Oxford University Press and Foundation for the European Review of Agricultural Economics 2009; all rights reserved. For permissions, please email journals.permissions@oxfordjournals.org

Trade liberalisation, agricultural productivity and poverty in the Mediterranean region

Nadia Belhaj Hassine

Faculty of Economics and Management of Nabeul, Tunisia

Magda Kandil

International Monetary Fund, Washington, DC, USA

Corresponding author: Nadia Belhaj Hassine, Economic Research Forum, 7, Boulos Hanna St., Dokki 12311, Cairo, Egypt. E-mail: nbelhaj{at}erf.org.eg

Received August 2007; final version received January 2009

A widely held view in the economic literature is that productivity growth is an important pathway through which trade liberalisation may alleviate poverty. This paper explores the link between trade openness, agricultural productivity growth and poverty reduction in a panel of Mediterranean countries. Technical efficiency scores and total factor productivity indexes are computed using the latent class stochastic frontier model to account for cross-country heterogeneity in farming production technologies. The relevance of agricultural productivity gains for poverty reduction is investigated through joint estimation of real per capita GDP growth and inequality changes in a dynamic panel setting. The findings illustrate the positive effects of openness on farming efficiency and productivity and give strong support to the view that agricultural productivity growth is a channel for poverty alleviation.

Keywords: openness, agriculture, productivity, poverty, latent class model

JEL classification: C24, C33, D24, F43, Q17


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