The Uruguay Round's induced changes in world agricultural prices will
affect the welfare of developing countries. The standard terms of trad
e effect calculation can mislead, since the 'distortion effect' operat
es alongside 'the terms of trade effect'. This study of the Uruguay Ro
und's impact on nine agricultural economies reveals distortion effects
which are many times larger than terms of trade effects. In three of
nine cases, the distortion effect reverses the impact of the terms of
trade effect. In two other cases, the distortion effect raises trivial
terms of trade effect up to around 1% of national income. (C) 1998 El
sevier Science B.V. All rights reserved.