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Large Costs and Small Benefits of the American Sugar Programme

Large Costs and Small Benefits of the American Sugar Programme KEITH E. MASKUS has been an Assistant Professor of Economics at the University of Colorado, Boulder, in the United States of America, since 1981; and in 1982-85, he was Director of the University’s International Economic Studies Center. In 1986-87, Dr Maskus was a visiting senior economist on the Planning and Economic Analysis Staff, Department of State, United States Administration, Washington. KEITH E. MASKUS analyzing, in the third section, the major policy dilemmas engendered by the American sugar programme. Concluding remarks are provided in the fourth section. THE ECONOMICS OF SUGAR Raw sugar has historically been subject to extreme cyclical price volatility in world markets. Many countries have tried to insulate their domestic economies from this price volatility through trade restrictions, production controls, preferential trade agreements at guaranteed prices and stockpiling. Paradoxically, these measures have increased the volatility of world sugar prices by forcing price adjustments onto the small share (typically around 20 per cent) of world output that is traded in residual free markets. As shown in Figure 1 , the two major price peaks since 1970 have been followed by periods of depressed world prices. The policy responses of the United States to this volatility differed in http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The World Economy Wiley

Large Costs and Small Benefits of the American Sugar Programme

Maskus, Keith E.
The World Economy , Volume 12 (1) – Mar 1, 1989
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Publisher
Wiley
Copyright
Copyright © 1989 Wiley Subscription Services, Inc., A Wiley Company
ISSN
0378-5920
eISSN
1467-9701
DOI
10.1111/j.1467-9701.1989.tb00465.x
Publisher site
See Article on Publisher Site

Abstract

KEITH E. MASKUS has been an Assistant Professor of Economics at the University of Colorado, Boulder, in the United States of America, since 1981; and in 1982-85, he was Director of the University’s International Economic Studies Center. In 1986-87, Dr Maskus was a visiting senior economist on the Planning and Economic Analysis Staff, Department of State, United States Administration, Washington. KEITH E. MASKUS analyzing, in the third section, the major policy dilemmas engendered by the American sugar programme. Concluding remarks are provided in the fourth section. THE ECONOMICS OF SUGAR Raw sugar has historically been subject to extreme cyclical price volatility in world markets. Many countries have tried to insulate their domestic economies from this price volatility through trade restrictions, production controls, preferential trade agreements at guaranteed prices and stockpiling. Paradoxically, these measures have increased the volatility of world sugar prices by forcing price adjustments onto the small share (typically around 20 per cent) of world output that is traded in residual free markets. As shown in Figure 1 , the two major price peaks since 1970 have been followed by periods of depressed world prices. The policy responses of the United States to this volatility differed in

Journal

The World Economy – Wiley

Published: Mar 1, 1989

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