4 have focused on micro-foundations for political and economic decision making by establishing stronger links between theory and empirics, emphasizing forces such as governance structures, political institutions, and ideology. These developments include extensions of the Grossman and Helpman (1994; 1995) model on political economy of trade policies: work by Acemoglu and Robinson (2001; 2006) on the interactions between institutions and policymaking; applications of Baron and Ferejohn’s (1989) model of decisionmaking rules and the role of agenda setting; work by Roland (1994; 2000) on the political economy of transition; by Shleifer (1997) on the role of bureaucracies and corruption in policymaking; by Persson and Tabellini (2000; 2003) on the political economics of fiscal policy and macro-economic policy and on the role of constitutions; and by Rausser, Swinnen, and Zusman (2011) on how integrating the four major analytical dimensions of public-policy analysis (incidence, mechanism design, political economy, and governance structures) can facilitate the separation of the public interest from specialized interests in any attempts to sustain policy reforms conditioned on political-economic equilibria.

In our presentation, we first document the key data and stylized facts that have emerged from the new global five-decade database. We present a series of tables and figures that show quantitative indicators of the extent of policy interventions, as well as statistical estimates of the degree of price distortion. We then review the political-economic hypotheses that have been explored in the literature to explain these patterns and assess the empirical evidence that has emerged. Finally, we draw implications from this empirical evidence and identify directions for new research, with an emphasis on the potential for agricultural-policy reforms.

# **2. Stylized Facts**

Many agricultural- and trade-policy developments of the past half-century have happened quite suddenly and been transformational. Such events include decolonization in Africa and elsewhere around 1960; the creation of the Common Agricultural Policy (CAP) in Europe in 1962; the introduction of flexible exchange rates from the 1970s; liberalization, deregulation, privatization, and democratization in many countries from the mid-1980s; the opening of markets in China in 1979, in Vietnam in 1986, and in Eastern Europe (following the fall of the Berlin Wall) in 1989; and the demise of the Soviet Union in 1991. More subtle are the influences of policies that change gradually in the course of economic development, as incomes grow and comparative advantages evolve. But what do the quantitative measures of distortions and reforms reveal?

Empirical indicators of agricultural price distortions (called Producer Support and Consumer Subsidy Estimates, or PSEs and CSEs) have been provided consistently for 25 years by the Secretariat of the OECD (2011) for its thirty member countries. However, the OECD provides no comprehensive time-series rates of assistance to producers of nonagricultural goods to compare with the PSEs, nor of what took place in those advanced economies during earlier decades. Data for these earlier decades from developed economies is needed in order to assess how various countries’ policies evolved during stages of development similar to those of today’s middle-income countries. As for developing countries, almost no comparable time-series estimates were generated in the two decades policies more thoroughly (while giving somewhat less attention to factor market distortions). And third, we place particular emphasis on the substantial body of theoretical and empirical research that has been published during the past fifteen years (that is, since the most recent citations in Binswanger and Deininger).