Abstract

Over the past two decades, trade in high-value (or value-added) agricultural products (HVPs) has been the fastest growing component of world agricultural trade. This study addresses some of the issues raised by promotion of HVP exports by considering the effects of various exogenous price shocks on the location of marginal production for value-added goods. Topics covered include: a general equilibrium model of trade in value-added and intermediate goods; a theoretical analysis of price and trade volume changes in response to exogenous price variations; and an analysis of optimal trade policies.