Understanding the impact of cotton subsidies on developing countries

Research conducted by ODI and Imperial College challenges a number of critical assumptions upon which contemporary models developed to investigate the impact of cotton subsidies are based. In doing so, it demonstrates that EU cotton subsidies may have a disproportionate and significant impact on developing country cotton production, particularly on those of its traditional trading partners, which include West African countries

The research addresses two fundamental assumptions:

i. That the structure of the international cotton market is unitary, in that importers source cotton purely on the basis of price; and
ii. The elasticity of supply characterising production and consumption decisions in each trading country is constant