30 post-crisis periods. During the pre-crisis period, policy adjustments may “undershoot”, since institutions constrain policy adjustments in response to pressures for change. Conversely, during the post-crisis period, policy adjustments may “overshoot.” The latter phenomenon seems to have occurred, for example, in the transition countries of Eastern Europe, where extreme liberalization of trade policies in the early 1990s—in the wake of the dramatic changes in institutions and politics—largely eliminated agricultural market and trade distortions. As the future unfolded, however, in the mid-1990s, protection in this region gradually increased toward moderate levels (Anderson and Swinnen 2010).

Recent analysis from the World Bank data set on NRAs, as well as the OECD reporting of PSEs, has revealed declining trends for high-income countries. These recent trends for this group of countries do not necessarily reflect actual changes in their distorting policy instruments. Instead, higher world food prices largely explain these outcomes. This result is entirely consistent with the “countercyclical bias” that we have assessed in Subsection 3.1. Regardless, the more recent biofuel and crop-insurance policies in the United States and other high-income countries have reversed the historical coupled-subsidy agricultural policies and their ultimate world price–depressing effects (Tyers and Anderson 1992; Rausser and de Gorter 2012).<sup>41</sup> The recent shift in agricultural policies focusing on renewable energy has major implications for world food prices and security. The trade-offs between food and fuel continue to be examined (e.g., Rajagopal et al. 2009; Chakravorty, Hubert, and Nøstbakken 2009). These policy shifts also have implications for the subsidies that result from current farminsurance programs.<sup>42</sup> However, unraveling these recent trends and the higher world food prices also establishes a causal connection with recent focus on biofuel and corn-ethanol energy production (Rausser and de Gorter 2012). In the case of at least the world corn commodity market, the small-country assumption invoked in the calculation of NRAs in the United States could well have been violated. Herein lies a research opportunity: to develop counterfactual world prices that net out the cloudy-measurement effects that result from active biofuel policies in high-income countries. The goal of this research would be to make as transparent as possible the continued pursuit of protectionist policies by various countries.

Along with these recent changes in high-income countries, agricultural-protection and market-distortion growth has recently emerged in two of the most important developing countries, China and India. In China’s case, this protection has mainly taken the form of market-price support for outputs; in India, the increase is largely due to input subsidies. While both of these countries’ reported NRAs actually fell during 2007–09 due to world price spikes, they may well rise again once international prices return to trend.

In conclusion, we find that our profession has made material progress in the politicaleconomic analysis of agricultural and food-policy distortions across the globe. Some have suggested that the lens of political economy is depressing because it leaves little room for economists to offer policy advice. But our analysis leads to a more optimistic perspective. In particular, based on enlightened political-economic analysis, sustainable policy reform can be implemented, inter alia, by sound advice in the face of crises, by changes in governance structures, by political entrepreneurship, by provision of information and mass media, by

> 41 One of the major economic motivations for the renewable-energy legislation (and the US biofuel policies that resulted) was the political desire to reduce program-commodity subsidies (deficiency payments) due to their favorable impact on the prices of corn, oilseeds, and wheat. This legislation and policies led to increased demand for corn, oilseeds, and wheat as feed-stocks for biofuel production. Between 2003 and 2012, US cornbased ethanol production increased sevenfold, EU oilseed-based biodiesel production increased sevenfold, and Brazilian sugar-based ethanol production increased threefold.

> 42 As the prices of the basic commodities increase, the magnitude of such subsidies also expands (Rausser and de Gorter 2012).