XIII. THE PRACTICE OF AGRICULTURAL POLICY ANALYSIS

How might those concerned with agricultural policy, as analysts or policy-makers, conveniently approach the issues and organize their research agendas? In particular, where does the policy analysis matrix fit into the process of thinking about and measuring the effects of agricultural policies? The purpose of this concluding chapter is to suggest answers to these two questions by summarizing the arguments already presented. Two sections review the analytical approach to policy analysis. The first describes policies as instruments to achieve particular objectives. The second identifies when government intervention can help an agricultural sector to run more efficiently and how an analyst can approach the problem of measuring the effectiveness of agricultural price policies. The scope of analysis is broadened in the third section to include macroeconomic policies, especially exchange rates, and linkages between those policies and agricultural price policies. The fourth section reintroduces the PAM approach as a way to implement this analytical process and as an empirical method for measuring the effects of policy. A good complement to the PAM approach, the construction of price policy graphs, is discussed briefly in the fifth section. A final section then returns explicitly to the use of budgets as a way to estimate PAMs and contrasts the strengths and limitations of this method with the use of estimated elasticities to measure efficiency, policy, and welfare effects.