ANALYSISProtectionary bias in agriculture: A pure economic argument

Empirical evidence suggests that the agricultural sector in the developed countries has enjoyed a greater degree of protection than the import-competing manufacturing sectors. Usually this is attributed to strong farm lobbies and hence on political factors. We provide a theoretical model and a possible explanation of this phenomenon based on purely economic arguments. Two importables are accommodated in a three-good three-factor model of trade and production, one is a labor-intensive manufacturing good and the other is an agricultural commodity. This captures the trade pattern of a typical industrialized country with an agricultural sector such as Europe and the USA. We show that uniform tariffs in agriculture and labor-intensive manufacturing will definitely hurt the land owners in real terms and may reduce their absolute return. Hence, if there has to be protection, it has to be biased in favor of agriculture.