AGRICULTURAL INCENTIVES AND INTERNATIONAL COMPETITIVENESS - GOVERNMENT INTERVENTIONS AND EXOGENOUS SHOCKS IN 4 EAST-AFRICAN COUNTRIES

Real agricultural prices depend on international prices, the real exch ange rate and sector-specific price interventions. For the case of fou r East African countries, this article decomposes the evolution of agr icultural prices during the 1980s into these three components. Additio nally, the article computes the relative agricultural prices that woul d have prevailed in the absence of sector-specific and macroeconomic d istortions. Results indicate that a strong anti-trade blas within the agricultural sector prevailed: importable products tended to be protec ted while exportables were disprotected. On the other hand, government interventions and inefficiencies in the marketing process precluded t he increases in the real exchange rate that took place during the seco nd half of the 1980s from being fully transmitted into higher agricult ural prices. Finally, and depending on the country, the removal of sec tor-specific and macroeconomic distortions would have caused real agri cultural prices to increase by an amount fluctuating between 10% and 6 8%.