Food Prices, Road Infrastructure, and Border Effects in Central and Eastern Africa
|
|
- Amos Marshall
- 5 years ago
- Views:
Transcription
1 Work in progress Food Prices, Road Infrastructure, and Border Effects in Central and Eastern Africa Paul Brenton Alberto Portugal-Perez Julie Régolo February 2013 Abstract Better integrated regional markets for agricultural goods would contribute to food security on Africa. We estimate the effect of distance and border-crossing impediments in Central and Eastern Africa for three food staples: maize, rice, and sorghum. We use high-frequency consumer price data for 152 towns in 13 African countries and a rich dataset on the road infrastructure separating the towns that includes details of the road quality for each segment. We estimate the impact of road infrastructure, border impediments and exchange rate fluctuations between countries on deviations from the Law of One Price, and find that substantial distance and border effects in explaining price differences between towns. Yet, according to our estimates, cross border trade costs impede regional market integration more than costs related to distance. These results suggest that priority should be given to reducing transaction costs and trade restrictions between African countries to improve market integration and to contribute to food security. JEL classification: Keywords: border effects, Africa, road infrastructure World Bank, pbrenton@worldbank.org; World Bank, aportugalperez@worldbank.org; University of Geneva, Julie.Regolo@unige.ch; 1
2 I. Introduction There are enormous opportunities for cross-border trade in agricultural products from food surplus to food deficit areas and as a result of differing seasons and production patterns. For example, Southern Malawi is not well endowed with agricultural potential and is a persistent food deficit area. Nearby Northern Mozambique is a productive area for growing maize, the main staple of the region, but it is distant from the main area of national consumption in the south of the country. Differences in weather patterns entail low correlations in production between countries and regional production is far less variable than production at the country level. Hence, regional trade integration can have a substantial impact by better linking farmers to consumers across borders and in ameliorating the effects of periodic national food shortages and increasing global food prices. Nevertheless, as summarized in World Bank (2012), while there is enormous opportunity for trade across borders between food surplus and food deficit areas, such potential is undermined by barriers to trade, which include regulatory constraints that raise the price and limit access to key inputs such as seeds and fertilizers, high transport costs reflecting limited competition among providers of transport and logistics services, the costs of getting goods across borders and opaque and unpredictable trade policies, including export bans. These policy-related barriers compound the high costs of physically moving food and people within and between countries in Africa due to poor infrastructure. The Africa Infrastructure Country Diagnostic study (World Bank, 2010) found a deficit across all the key core infrastructure, transport, telecommunications and energy. Clearly, there is a need to scale up the levels of investment in trade related infrastructure. Though road infrastructure along the major international trade corridors is increasingly in fair to good condition, the same is not the case on the intra-regional links which require much greater attention in discussions about filling the infrastructure gap in Africa. An important step towards the implementation of policy to improve food security is to evaluate by how much trade barriers at the border and transport costs impede the integration of agricultural markets. The depth of market integration in a region is typically assessed by the volume of intra-regional trade. This is difficult in Africa because of the substantial volumes of informal trade in food that are not captured in official statistics. A recent report (USAID (2013) suggests officials statistics in West Africa may underestimate flows of trade in food by as much as 80%. This paper uses an alternative procedure to assess the extent of regional market integration for basic food staples. It measures market integration in Africa by examining food prices in different markets and the extent to which they move together. In well-integrated and well-functioning markets, price differences should be arbitraged away through intraregional trade. If prices of goods are equal across locations, once converted into the same currency, the law of one price (LOP) holds. A less restrictive version of the LOP, its relative version, admits that even if prices are different due to structural differences, highly integrated markets should have similar price variations, through a customer arbitrage across markets. In other words, the change in relative prices should be zero under the relative LOP. Yet, high transport costs, border barriers, and imperfect markets may 2
3 prevent arbitrage and this would result in large price dispersion and higher price variations among locations; which lead to potentially high welfare costs. In this paper, we examine movements in relative prices of 3 key agricultural commodities, maize, rice and sorghum for 152 towns located in 13 countries of the region 1. We estimate the extent to which road distances and traveling time, national border frictions, and nominal exchange rate variations have an impact on deviation on relative prices (LOP absolute version) and on the monthly change in relative prices (what we call the relative version of the LOP). 2 The use of specific commodity prices leads to precise estimates of border coefficients. Indeed, recent research shows that using aggregate prices indicators instead of disaggregated good prices could lead to larger and less precise estimates of border affects (e.g. Broda and Weinstein (2008) and Engel et al. (2005) for the US-Canada border; Grafe et al. (2008) for five central Asian countries, Aker et al. (2010) for the Niger-Nigerian border, and Versailles (2012) for five East African countries. To assess the role of distance and travel times on market integration, we use information from a rich database on road infrastructure between African towns that includes information of the quality of roads. Border impediments are evaluated by estimating a model where the explained variable is a measure of the relative price of a good between two locations (or ratio of prices in a common currency) and the explanatory variables are a border-dummy for town-pairs located in different countries, a measure of the distance or travel time separating the towns, and other controls, as in Engel and Rogers (1996), Parsley and Weil (2001), Broda and Weinstein (2008), and others. We introduce interactions of month-product and town-product fixed effects to control for unobserved variations along these dimensions. For the LOP, the coefficients on the border dummies evaluate the magnitude of relative price divergence between countries with respect to relative prices within countries. A recent paper by Gorodnichenko and Tesar (2009) recently points out that estimates of this standard model fail to take into account the so-called country heterogeneity effect: if relative price variability across locations within the same country differs systematically country-by-country, the border effect measured by a regression comparing within-country and cross-country price dispersion will be confounded with the difference between these countries' internal price distributions. We take into account this critique and compare the distribution of relative prices among countries. In addition, we provide lower and an upper bound estimates for estimated border effects. Our estimates suggest that road distances and travelling time between towns as well as border frictions largely impede market integration in the region. On average, distance increases price differences between countries by 17% in the region and, once controlled for distance, price differences are estimated to be 11.3% larger between than within countries. Second, we provide comparable estimates for border effects for the 25 pairs of contiguous countries in the sample. Yet, we find that distributions of relative prices could sharply differ within countries in the 1 Burundi (BDI), Djibouti (DJI), Democratic Republic of Congo (DRC), Ethiopia (ETH), Kenya (KEN), Mozambique (MOZ), Malawi (MWI), Sudan (SDN), Somalia (SOM), Rwanda (RWA), Tanzania (TZA), Uganda (UGA) and Zambia (ZMB). 2 Deviations from the Law of One Price, estimated by taking the absolute log of relative prices in level in the LHS, give the long run border effect, as argued by Versailles (2012), while deviations from the Relative Law of one price, estimated by taking the absolute first difference of relative prices, count for the short term border effect. 3
4 region. In particular, domestic relative prices in DRC and in Somalia are around 40% greater than the average relative prices of town-pairs within Djibouti, the country with the best domestic integration. According to Gorodnichenko and Tesar s critique, for these country pairs with sharp differences of domestic price distributions, border effects are highly volatile according to the benchmark used for their estimation. We then provide lower and an upper bound estimates for border coefficients. We find that for most country-pairs, large border effects estimated using the absolute LOP are associated with large border effects estimated using the relative LOP and provide the distance equivalent of these border effects. According to the results, the most integrated country pair in the sample is Tanzania and Zambia while one of the least integrated pair is Somalia and Ethiopia. Finally, we discuss the potential value of this analysis in monitoring the impact of regional integration and, in particular, at identifying borders that can be subject to potential policy reforms aimed at facilitating cross-border trade in Africa. The rest of the paper is organized as follows. Section 2 develops the empirical model and discusses the methodology of the identification of border effects. Section 3 presents the data and describes the sample. Section 4 presents and discusses the results for the impact of transport costs and border impediments on deviation from the LOP and the RLOP. Section 5 provides our main conclusions. 2. Empirical Model Deviations from the LOP and Market integration. The Law of One Price (LOP) states that, once converted to a common currency, commodity prices should be equal across locations, when markets are fully integrated. In a less restrictive version the relative version of the law of one price (RLOP) prices may be different in two towns, but price movements should be the same in these towns. 3 If the LOP holds, the RLOP also holds automatically. In segmented markets, where arbitrage is not possible, the price level could vary across locations for a variety of reasons. One is that production costs may be different across locations. For example, the price of non-tradable inputs or services could differ across locations according to the resource endowments and/or productivity of workers (see Gorinchas et al., 2012). Another reason is that preferences and/or market size may vary across locations and lead to difference in prices. If markets are perfectly integrated and final goods perfectly homogenous, economic agents will arbitrage until equalization of goods prices, i.e. until the LOP hold. However, trade costs or other market imperfections may impede arbitrage so that markets are imperfectly integrated. In that case, and if structural price differences between locations are high enough with respect to transport costs to motivate arbitrage, the price differences between locations will be equal to 3 The analogy is drawn from the absolute and relative version of the purchasing power parity that focuses on price indices. 4
5 trade costs (Gopinath et al, 2011): pikt p jkt T, where p ikt and p jkt are the price of product k at time t respectively in towns i and j and T are the trade costs associated to trade between these towns (which include transport costs and transaction costs). According to this expression, the greater the trade costs, the greater are the price differences between locations. The RLOP focuses on the speed to which price shocks are spread and allows price levels to be different across locations. Therefore, structural differences (such as resource endowment, market size, differences in productivity) do not necessarily prevent the RLOP to hold, and deviations from the RLOP should be directly related to trade costs. Trade costs between locations can be decomposed into (i) transport costs that are variable and positively related to distance and (ii) all fixed trade barriers between locations. Denote T w=τ.distance+η the trade costs between towns within the same country (with τ >0 the transport costs associated to distance and η the transaction costs/fixed trade barriers between towns). For cross-country trade, T B=τ.distance+η+B with B the border effect or the transaction costs and trade barriers associated with crossing the border. It follows that the so-called border effect is the difference between transaction costs (and degree of integration) associated to trade between countries T B and those associated to trade within countries. p p.distance B, if towns i and j are in different countries and ikt ikt jkt p p.distance, if towns i and j are in the same country. jkt A similar reasoning holds for the variations of relative prices. Therefore, to assess the transaction costs associated with crossing the border and transport costs behind deviations from the absolute Law of One Price, we estimate the following specification: P P 0 1 RoadDist Border, ln / ln (I) ikt jkt ij IJ ij ik jk kt i jkt IJ and for deviations from the relative version of the LOP: P P 0 1 RoadDist Border u, ln ikt / jkt ln ij IJ ij ik jk kt i jkt (II) IJ P ikt In (I) and (II), is the price of commodity k in town i and month t expressed in dollars. As P ikt / P jkt is the ratio of prices labeled in dollars, it is also a measure of the real exchange rate for commodity k between towns i and j in month t. In (II), ln Pikt / Pjkt is the first difference of the log of relative prices of good k between towns i and j for months t and t-1, or the monthly variation of the log of the real exchange rate of good k. RoadDist ij is the road length between towns i and j. Its coefficient is expected to be positive as price differences are deemed to be 5
6 bigger between more distant cities. different countries, and zero if not. 4 The variables ik and jk Border ij is a dummy that equals one if towns are located in are town-product dummy interactions and control for town-product kt specific characteristics affecting price differentials such as the potential non-perfect homogeneity of products across cities (differences of quality, color, shape) or differences of input of services; are month-product dummy interactions and control for specific monthproduct variations. In model II measuring deviations of relative version of the LOP (henceforth referred as RLOP), town-product dummies control also for idiosyncratic measurement error or seasonality in some towns that increase price variations on average Interpreting coefficient estimates As a dummy designating town-pairs located in the same country (e.g. RWA-RWA, DRC-DRC, MWI-MWI ) are not included in models I and II, the coefficients of border dummies measure by how much a transition from the average within-country town pair (RWA-RWA or DRC-DRC or BDI-BDI ) to a between country town pair (RWA-DRC or DRC-BDI or RWA-BDI ) raises the average relative prices (model I) or its variation (model II). In the general version of the model with a single border-dummy for the region (as opposed to dummies specific to each border), the border coefficient, γ, measures this transition on average in the region. Results for this specification are discussed in section 4.1. When dummies for each country-pair border (I-J) are introduced, the coefficient of each dummy, γ I-J, reflects the relative price between countries I and J with respect to the average within-country relative prices in the sample. The results from this specification are shown in section 4.2. Measuring the relative price between countries with respect to a common benchmark (the average within country relative price in the region) has the advantage of estimating relative price levels (or variations) at borders which are directly comparable across country-pairs. However, one has to be careful with the interpretation of border coefficients, in particular if countries have different price distributions 5. First, border coefficients may not reflect the direct effect of crossing the border on relative prices (relative prices variations). For example, the border effect estimated between Tanzania and Kenya should reflect the magnitude of relative prices between Tanzania and Kenya with respect 4 The border dummy can be specified as (i) a single dummy measuring the average effects of borders in the sample (γi-j=γ) or (ii) border dummies specific to country-pairs (γi-j for all (I-J) {DRC-BDI, KEN-ETH, MWI-MOZ, RWA- BDI, RWA-DRC, SDN-ETH, SDN-KEN, SOM-DJI, SOM-ETH, SOM-KEN, TZA-BDI, TZA-DRC, TZA-KEN, TZA- MOZ, TZA-MWI, TZA-RWA, UGA-DRC, UGA-KEN, UGA-RWA, UGA-SDN, UGA-TZA, ZMB-DRC, ZMB-MOZ, ZMB- MWI, ZMB-TZA}). We first evaluate the average border effects in the region by introducing a single border dummy that takes the value of 1 if towns are located in the same country, 0 otherwise. We later, replace the dummy variable with 25 border dummies, each one defined for each pair of contiguous countries in the sample. 5 The distribution of prices can vary across countries with the degree of integration of their domestic labor market and good markets. 6
7 to relative prices within Tanzania and/or within Kenya. If relative prices within Tanzania differ substantially from the average relative price within the countries in the sample, the border coefficients of model I may not capture the effect on prices of crossing the border from Tanzania to Kenya. Second, estimates may reflect heterogeneity in relative prices across countries as pointed out by Gorodnichenko and Tesar (2009). When the distribution of relative prices (or relative price variations) in a country is different from the distribution of relative prices in the country at the other side of the border, the border coefficients may reflect what Gorodnichenko and Tesar (2009) call the country heterogeneity effect. For example, in the context of the US- Canada border, these authors found that the US-Canada border effect is much bigger when estimated from the Canadian perspective (i.e. when including a dummy for US city pairs and not the dummy for Canadian city pairs) than when estimated from the US perspective (i.e. when including a dummy for Canadian town-pairs and removing the US city-pairs dummy). This difference is explained by a relatively lower variation of Canadian prices than US prices. Therefore, when within-country price distributions are very different, it is only possible to estimate a lower and an upper bound for the border effect by omitting alternatively the dummy of one of the countries, which becomes the benchmark for the border coefficient. To deal with these potential issues, we examine the level of intra-national market integration of countries in the region and compare their relative prices distributions in section 4.3. Further, in section 4.4, we estimate the magnitude of the border from the perspective of each bordering country (benchmark country) by introducing in regressions a dummy for town-pairs located in the same country (e.g. RWA-RWA, BDI-BDI ) and omitting the dummy for the benchmark country. This provides lower bounds and upper bounds for each border coefficient estimate of models (I) and (II). In addition, border coefficients measure the degree of integration of markets between countries relative to the degree of integration of domestic markets. The less integrated domestic markets within African countries are, the lower the border coefficients are, ceteris paribus. We also provide estimates of the degree of integration of domestic markets in the countries of our sample. Finally, border coefficients can capture four confounded factors behind cross-countries price differences. First, they can reflect transaction costs related to crossing the border, such as trade policy regulations (bans, tariffs, licenses, non-tariffs measures), customs efficiency or currency exchange costs. Second, they can capture idiosyncratic barriers between countries, which may impede trade partnership, such as language or ethnicity differences 6. Third, the markup across countries can be different when the degree of market competition varies. Fourth, border coefficients can also capture the different degree of price stickiness in markets on both sides of the border. Indeed, if the price of a good in local currency does not change when the nominal exchange rate changes (i.e. prices are sticky), cross-border relative prices would fluctuate with 6 As an example, Aker et al found that at the border between Niger and Nigeria, price differences may vary from 8% to 24% regarding if the people are from the same ethnic group or not. 7
8 the nominal exchange rate and these variations will be captured by the border dummies. Note however, that price stickiness may be related to border barriers, as a seller can resist cutting the price of their good when markets are imperfectly integrated. To isolate the last effect, we introduce a measure of monthly nominal exchange rate variation on the right hand side of the regression ( ln ER ). ijt We restrict the sample to market-pairs that are less than 1000 kilometers apart, the average distance between markets in our sample 7 to diminish the effect of country-level unobserved heterogeneities, by assuming that they are weaker for market pairs located close to the border The distance-equivalent of border frictions To provide a measure of the size of the border, we follow the literature and compute the distance-equivalent of the estimated border effects. Our measure, Dist, was used by Engel and Rogers (1996) and provides the distance between towns in the same country that would increase price dispersion by the same magnitude than that due by the estimated border coefficient 8 : Dist IJ exp IJ / 1 (III) This measure of the distance-equivalent of the border does not change whether distance is measured in miles, or kilometers, or any other unit Data Detailed consumer price data for 3 commodities (Maize, Sorghum, and Rice) was compiled from Fewsnet and FAO for 152 towns in 13 countries in East and Central Africa on a monthly basis. Because of data availability, we restrict our analysis to the common period May 2008-Oct We match the commodity price data with a detailed dataset on the road network in these countries compiled from GIS. The rich road network data not only includes the length of the fastest or shortest road separating any pair of towns in the sample of countries, but also includes detailed measures on the road quality for each segment, which is used to obtain the average number of hours required to travel between any two towns. Figure 1 shows the geographical dispersion of the towns in the sample as well as paved and unpaved roads. Here: Figure 1 7 In their main analysis Gopinath et al (2009) restrict the sample to markets within 500 km of the U.S.-Canada border, although they find very similar results for bandwidths of 100 km or 350 km. 8 Dist. solves the equation: IJ 1lnDist IJ. 9 A second measure, used by Parsley and Weil (2001), compute the extra-distance that has to be added to the average distance between two towns to generate as much price difference as the border coefficient 9. This measure has the advantage to give a distance equivalent in the unit in which the distance is measured in the sample. Yet, its dependence on the size of the average inter-town distance in the sample makes it very sensitive to small variations in the estimated coefficients. In addition, the measure is much larger than Dist and looks less credible. Consequently, we prefer the distance equivalent as computed by Engel and Rogers (1996). 10 Data for DRC is only available over this period which constraints the sample. As data for other countries is available over a larger period (January 06-August 2011), we check the robustness of results on the larger period by excluding DRC. 8
9 In the raw data, prices of commodities are sometimes available in different units (e.g. kilograms, tons, etc) and for different varieties (e.g. maize or white maize). In order to keep the largest possible number of observations, we transform the price units to dollars per kilogram using the monthly average exchange rate and assimilate a variety (e.g. white maize) to the main commodity (e.g. maize) when the latter is not available. In appendix A, we compare the relative prices of our expanded sample with a more restricted sample where we exclude goods that are labeled differently than the main good (e.g. white maize) and find that the distribution of relative prices are similar and not very likely to affect results (see Figure A.1). Table 1 provides a summary description of the number of cities and the price data availability for each of the three commodities studied. Depending on the country, commodity prices may be available for one to three commodities. The number of cities in the data varies also greatly between countries. Most of the countries have price data for at least two commodities and 6 towns; the greater data availability being for Rwanda with 30 towns and 3 commodities. Table 1 here: Table 2 reports summary statistics for the two dependent variables in our regressions: the absolute value of the log of relative prices and the absolute value of the first difference of the log of relative prices. Summary statistics are broken down into: (i) within-country price differentials where both towns are located in the same country, and (ii) between-country price differentials where each town is in a different neighboring country. A zero value of the log of relative prices implies that the LOP holds. Likewise, a zero value of the log of first differences in relative prices implies that monthly price variation in both locations is the same, and thus, the relative version of LOP (RLOP) holds (even if the LOP does not necessarily hold). Column (1) reports an average measure of the distance between towns (in kilometers) and column (2) reports our measure of average travelling time (in hours) between towns in each subsample. Comparing the average within-country price differentials with between-country price differentials gives a first insight on the potential border effects between countries. Withincountry prices are 30% (=exp(0.26)-1) higher on average than the LOP benchmark, and withincountry relative prices variations are on average 19% (=exp(0.17)-1) higher than the RLOP benchmark. Both statistics are higher in the between-country sample with relative prices being 49% (=exp(0.41)-1) higher on average than the LOP benchmark, and relative-prices monthly variation being 20% (=exp(0.18)-1) higher on average than the RLOP price benchmark. Table 2 here For example, price differences between a town in Malawi and a town in Mozambique are on average 28 % (=exp(0.25)-1), a figure greater than within-countries price differences (of respectively 19%(=exp(0.17)-1) in Malawi and 22% (=exp(0.20)-1) in Mozambique). Yet, the econometric analysis below attempts to disentangle the contribution of inter-town distances and the contribution of border barriers on price differences. Across commodities, relative prices in levels and variations are on average larger for Maize than for Sorghum and Rice. 9
10 East and Central African countries seem to have heterogeneous distributions of within-country relative prices, as countries with greater price dispersion tend to have larger distance between towns in our sample. For example, DRC and Somalia are the countries with the largest average price differences, whereas Djibouti and Rwanda are on the other side of the spectrum with the smallest price differences. This is in line with an effect of transport costs on price differences Econometric Analysis. The competing effects of transport costs, barriers associated with crossing the border and nominal exchange rate variations on price levels and price variations between locations are assessed in the next section in four steps. First, we estimate the average effect of these three factors in the region and present the global distance equivalents of the average impact of borders. Second, border effects are estimated for each pair of contiguous countries. Third, we study the differences of price integration within the countries of the sample. Fourth, we check the robustness of the estimations, provide an interval for the border effects and discuss distanceequivalents for each border Border, Distance and Price rigidity in the region. Table 3(a) reports estimates from variations of model (I), where the dependent variable is the absolute value of the log of relative prices. Specifications (1) and (2) estimate the average border effect in the East and Central African regions while controlling respectively for distance and travelling time between cities. Specifications (3) and (4) include the absolute value of monthly depreciation of the exchange rate and column (5) and (6) show results using a restricted sample of town-pairs that are located less than 1000 km of distance of each other. All regressions include interaction terms of town-product dummies and product-year dummies. All coefficient signs are as expected. Our estimated coefficients on road length and border dummy are similar in terms of magnitude to those obtained by Aker et al (2012) with the same specification between Niger and Nigeria. According to estimates of specification (1), a distance of 1212 km (the average inter-town distance in the sample) accounts for an increase in prices of about 17.5%. 12 Border frictions have a substantial effect on price differentials. After controlling for inter-town distance, price differentials for towns separated by a border increase by 11.3% (=exp(0.107)-1) on average in the region. To provide a magnitude of the average effect on prices of crossing a border in East and Central Africa, we compute the distance-equivalent measures, Dist, defined by equations (III). 11 Only price data of Sorghum are available for Sudan. Sorghum price differences between locations are relatively lower on average in the sample than those of Maize and Rice. This and the low number of observations could explain why, despite its relatively large size, Sudan within price differences are relatively low on average. 12 Computed as: exp[0.0227*ln(1212)]-1. 10
11 Accordingly, crossing a border in the region corresponds, on average, to a distance-equivalent of 110km. There are multiple reasons that could explain low market integration between these African countries. Nevertheless, the distance equivalent estimated here is lower than the one found by Engel and Rogers (1996) between Canada and US (they found Dist equal to ); and are in the same range than those reported by Broda and Weinstein (2008), who use microdata between US and Canada. Even if border estimates are difficult to compare given the heterogeneity of products or level of price aggregation between studies, is it possible that the border effects between African countries are as low as those found between developed countries? Border coefficients measure the degree of market integration across different countries compared to the degree of integration of markets located within the same countries. The less integrated markets within African countries, the lower the estimated border coefficients are, ceteris paribus. Therefore, low values of border coefficients could either reflect low barriers at the border or a substantial lack of integration within countries. On the one hand, weighbridges and policy controls increase transport delays and therefore constitute substantial barrier to trade within African countries. Moreover, ethnicity and language can be different within countries and can preclude full market integration. On the other hand, the lack of control at the border and the corruption of customs may facilitate trade of primary commodities between countries; which is reflected in the large amount of informal trade estimated by Stryker (2012) based on FEWSNET data. For example, according to their results, MT of Maize have been informally traded between Tanzania and Kenya in In this regard, it is less surprising that estimated average border coefficients between African countries can be low. Table 3 here In specification (2), we replace the inter-town kilometer distance variable with the measure of inter-town travel time in hours. While estimates do not vary significantly, the effect of travel time on relative prices seems to be lower than the effect of distance in previous estimates. The small difference may be due to the fact that inter-town travel variable takes into account the quality of all road segments and is therefore richer than the distance variable. Analogous to distance-equivalent measures computed for specification (I), we compute the time-equivalent measure of borders in a similar way to equation (III) and report this figure at the bottom table 3. We find that crossing a border has the same effect on relative prices as travelling 518 hours between towns of a same country. Specifications (3) and (4) include exchange rate variations. The estimated coefficient on this variable is positive and significant, and its addition reduces the estimated border coefficient. Consistent with the literature, the strong impact of this coefficient reveals that nominal price rigidities explain substantially the deviations from the Law of One Price (Crucini et al, 2009). In the absence of nominal price rigidities, the exchange rate coefficient should be non-significant. However price stickiness may be dependent upon market segmentation as producers will adjust more quickly their nominal price if markets are integrated. In that sense, the effect of variations of the nominal exchange rate on relative prices between countries is a consequence of border barriers and therefore is part of the border effect. 11
12 To reduce heterogeneity between town-pairs and the possibility of spurious correlation when considering towns that are far away from each other, specifications (5) and (6) restrict the sample to town-pairs that are no more than 1000 kilometers apart, which is roughly the median inter-town distance in the sample. As expected, the coefficient on the border dummy becomes smaller. Fewer differences in language, of ethnicity and more generally of culture between towns geographically close to each other might explain this finding. Transport costs play a greater role in this subsample where the distance equivalent of the border effect is 14 km (column (5)). We turn the analysis to the deviations from the relative version of law of one price around model II. Analogous to specifications in table 3a, table 3b reports estimates of similar variations of model II, where the explained variable is the first difference of relative prices (in logs) taken in absolute value. Across specifications, the coefficients on distance and on the border dummy are positive and significant. More precisely, in column (1), the average distance in the sample (1 212km) increases the monthly variation of relative prices by 3.5% (=exp(0.0049*ln(1212))-1), on average. Similarly, the monthly variation of relative prices for towns separated by a border increases by 1.3% (=exp(0.0134)-1) on average, after controlling for distance and market-product fixed effects. According to these results, barriers at the border would appear to play a relatively greater role in explaining deviations from the absolute law of one price than from the relative law of one price. Coefficients on nominal exchange rate variations in columns (3) and (4) are not significant. As in previous estimates, the coefficient of the border dummy becomes smaller when the sample is restricted to town-pairs located at less than 1000 km (columns 5 and 6). Finally, deviations from the absolute and the relative law of one price are influenced by intertown distance and are, on average in the region, greater between countries separated by a border than within countries. In next section, we attempt to estimate the border effects specific to each pair of contiguous countries Specific bilateral border effects. Table 4 reports estimates of specifications that include border dummies for each pair of contiguous countries (25 country-pairs in the sample), instead of a single border dummy. Specifications (1) to (4) account for deviations from the Law of One Price and specifications (5) to (8) for deviations from the Relative Law of One Price. Introducing 25 border dummies allows for heterogeneity of border effects across country-pairs. Most border coefficients are positive and significant. The coefficients on distance (in column (1), (3), (5) and (7)), travel time (in column (2), (4), (6) and (8)) and exchange rate (in column (3), (4), (7) and (8)) are almost unaffected by the decomposition of the border coefficients between each country-pair. Table 4, here 12
13 In columns (1) to (4), the positive sign of most border dummy coefficients reveals that relative prices for pairs of towns located in different countries tend to be larger than the average withincountry relative prices in the region. By contrast, the border dummies for Kenya-Uganda, Uganda-Sudan, Tanzania-Burundi, and Tanzania-Zambia are not significant, and thus not significantly different from the average within relative prices in the region. Thus, relative prices between these country-pairs are the lowest of the region and reflect greater integration between them for Maize, Sorghum and Rice. The larger border coefficients found are between Somalia and Ethiopia and Zambia and DRC, for which price differences are respectively 47% (=exp(0.388)-1) and 36% (=exp(0.306)-1) greater than the average within the country of the region. The other border coefficients are in the range [0.042 ; 0.19]. For example, price differences between Mozambique and Malawi are 4% (=exp(0.0425)-1) greater than the regional average within countries. As a member of both regional agreements, EAC and the SADC, and as a costal country, Tanzania tends to be relatively more integrated with all its neighbors. The inclusion of the exchange rate variation in column (3) and (4) decreases slightly all border coefficients. This reveals that price stickiness and exchange rate variations influence price differences between all contiguous countries in the sample. Figure 3 compares the border coefficients in the baseline regression focusing on the LOP (column 1) and in the regression focusing on the RLOP (column 5). Overall, there is a positive correlation between coefficients as greater relative prices between countries are associated with greater variations of relative prices. This correlation supports the argument that both approaches (LOP and RLOP) provide similar measures of market integration. Country-pairs Zambia-DRC and Somalia-Ethiopia seem to be the exception, as estimated border coefficients show large differences in prices, but similar movement of relative prices. Country pairs Uganda- DRC and Zambia-Mozambique have not only one of the largest relative prices in the region but also substantial monthly prices movements 13. On the contrary, Tanzania and Zambia are relatively well integrated as price differences and relative price variations are low compared to other country pairs. Figure 3 here 4.3. Comparison of market integration within countries. To examine in more details the heterogeneity of relative prices within countries, figures 2a and 2b show the distributions of within-country relative prices and relative price variations after controlling for distance. More precisely, we take the residuals that come from the estimation of the following specification: Q ln RoadDist ijkt 0 1 ij ik jk kt i, jkt ijkt ikt jkt with Q ln P / P for Figure 2(a) and Q ln P / P for Figure 2(b). ijkt ikt jkt 13 Note that for these country-pairs the border effect are computed only on Maize given the data availability 13
14 Figure 2 here. The distributions of relative prices after controlling for distance are heterogeneous (Figure 2(a)), with relative prices being more dispersed in DRC and Somalia. By contrast, the distributions of monthly variations of relative prices are more homogenous across countries (Figure 2(b)). To compare more precisely the market integration within countries, we took a subsample of town pairs located in the same countries and estimate specifications similar to model I and II but where the border dummies are replaced by country dummies (D C-C): Q 1 2 lnroad _ Dist D φ φ φ ijkt ij C C C ik jk kt ijkt C D C-C is a dummy equal to one if the towns i and j are located in country C, and equal to zero otherwise. In table 5, column (3) show the coefficients obtained on the country dummies for the P test of the LOP, i.e. when Qij kt ln ikt P, and column (6) for the test of the RLOP, i.e. when ikt Q. The omitted country dummy in both regressions is DJI-DJI, i.e. the ijkt P ln ikt Pikt coefficients on country dummies reflect the integration of these countries with respect to Djibouti. In the table, countries are ranked according to the level of market integration, from the most to the least integrated. Table 5: here Here again, the results suggest that the level of integration sharply differ between countries. The most integrated countries are Sudan and Djibouti whereas the least integrated are Somalia, DRC and Burundi. This indicates that for these three latter countries, estimated border effects could be very different with respect to the benchmark used. For example DRC is relatively less integrated than the average country in the sample. It follows that the border coefficients previously estimated for DRC are likely to overestimate the barrier that the borders represent for this country. Worse, the border coefficients may capture the fact that price differences are different between DRC and the other countries (Gorodnichenko and Tesar, 2009) Border effects and Robustness. Previous estimations of border coefficients provide estimations for between-country market integration disregarding the integration within the countries on either side of the border. To provide accurate estimates of the border barriers to trade, we follow Gorodnichenko et al (2009) and control for within countries heterogeneity by introducing dummies for towns-pairs located in the same country 14. As a country dummy has to be omitted in each regression to avoid 14 The introduction of country dummies in equation (I) and (II), in addition to border dummies and town dummies generate a multi-collinearity problem which leads to inaccurate estimations of the border coefficients. This is the case, even if one country dummy is excluded (see Gorodnichenko and Tesar (2009)). To avoid this collinearity problem, we follow Gorodnichenko and Tesar (2009) and constrain the sum of the town dummies to be equal to zero for each country. 14
15 multicolinearity, serving as benchmark, we estimate separately 13 regressions, one for each country in our sample. This provides two border coefficients for each country-pair (one for each contiguous country) : the lower bound and the the upper bound estimates of the border coefficient. Table 6 (a) and (b) report estimates for the deviations from the LOP and the RLOP, respectively. In both tables, Column (1) reports estimates of the baseline regression with border coefficients for each country-pair (models I and II, respectively). Column (2) and (4) show estimates of the lower and upper bounds for estimated border effects respectively and columns (3) and (5) report the benchmark country for each bound. Columns (6), (7) and (8) show the distance equivalents of each coefficient. Table 6: here. When within-country price differentials are similar, the lower bound is close to the upper bound, as in the case for example for Kenya-Ethiopia. In contrast, large differences between lower and upper bounds reveal heterogeneity of within-country price differences. In this case, border coefficients reflect both heterogeneity in price variability between the countries and the costs associated with crossing the border. Ethiopia and Kenya have similar price distributions. Therefore, in this case, the border coefficient between these two countries could be interpreted as trade frictions and the border effect is accurately estimated. The first row of column (4) reports coefficients estimated by running model I with all within-country dummies except the Ethiopia-Ethiopia dummy. According to this estimate, crossing the border for Ethiopia increases price differences by 18% (exp(0.166)-1). The lower bound in column (2) provides the border estimate from the Kenya perspective, which is similar (of 16.6%). Both bounds are also similar to the previous estimates of the border between Ethiopia and Kenya (of 17.3%). The distance equivalent of crossing the border between Kenya and Ethiopia is about 704km(551 and 901km respectively from the Ethiopia and the Kenya perspective). Compared to other country pairs, the Kenya-Ethiopia border effect is substantial. The border coefficient between Tanzania and Mozambique measures accurately border frictions. The estimated distance equivalent for this country pair is relatively low, i.e. around 9 km. Country pairs for which the lower and upper bounds are substantially different often involved either DRC or Somalia, the most different countries in terms of within price distribution in the sample, as shown in the Figure 2. In that case, the border effects between these countries and their neighbors are likely to be confounded with the price distributions differences of these countries. Despite the apparent similarity of within country price distributions, the border effects coming from deviation from the RLOP are less accurately estimated as the interval given by the estimations of the bounds may be wide. Finally, while having a large sample of countries is worthy and provides comparable estimations of border effects over the region, the large amount of heterogeneous data could add noise to the estimations and the coefficients on distance representing an average effect. To check the 15
16 robustness of our results, we re-estimate the border coefficients and the lower and upper bounds by running a separate regression for each country-pair sub-sample (i.e. 25 sub-samples). Table A3 in Appendix 3 reports these estimates for deviations from the LOP (column (1) to (3)) and the RLOP (column (4) to (6)) and show that border coefficients are fairly similar and confirm our previous estimations 15. Figure 4 illustrates the border effects obtained with local regressions and compares it with within-country relative prices. It shows that for all country pairs, the intercountry relative prices are greater than within countries, and that the border effect may be viewed differently from each side of the border. Figure 4: Here To sum up, we find a substantial effect of border frictions and transport costs on average in the region on relative prices levels and variations. The magnitude of border effects is heterogeneous between country pairs, Tanzania-Zambia being the most integrated country-pair and Somalia and Kenya one of the least (with an estimated distance equivalent of 0km and km respectively). The market integration within countries differs also substantially in the sample. In particular, relative prices are high between towns within DRC, Somalia and Burundi (of respectively 49.6%, 43% and 13.6% above the average relative prices of towns within Djibouti, the country with the best integration between its towns). Finally, all cross-country relative prices are correlated with exchange rate variations, which suggest price stickiness within countries. 5. Conclusions This paper seeks to contribute to the literature on the importance of policy and infrastructure constraints affecting the capacity of countries to trade food across borders in Africa. As summarized in World Bank (2012), while there is enormous opportunity for trade across borders between food surplus and food deficit areas, such potential is undermined by barriers to trade along the whole of the value chain. We evaluate the relative impact of high transportation costs and border impediments on market integration between 25 pairs of contiguous countries in the East and Central African region and for 3 key agricultural commodities, maize, rice and sorghum. To this, we assess the extent to which road infrastructure and international borders explain deviations of absolute and relative Law of One Price (LOP) between 152 towns of the region. Results suggest that, having controlled for exchange rate variation, transport distance or travelling time between towns and border frictions largely impede market integration. On average in the region, distance increases price differences between countries by 17.3% and, once controlled for distance, price differences are estimated to be 11.3% larger between than within countries. For most country pair, strong 15 Further robustness checks have been applied and are shown in the annex. Border coefficients have been estimated in sub-sample with several restrictions according to distance between cities (taking only the town-pairs which are not further than 500, 1000 or 2000 km from each other) and taking a larger period of time for some country-pairs. Overall the estimated coefficients are very similar. 16
17 deviations from the LOP are associated with strong deviations from the relative LOP, the most integrated country pair being Tanzania-Zambia while one of the least is Somalia-Ethiopia. We find also that the market integration within countries differs substantially in the sample. In particular, relative prices are high between towns within DRC and Somalia, of respectively 49.6% and 43% above the average relative prices of towns within Djibouti, the country with the best integration between its towns. In terms of policy, the results suggest that market integration is relatively low both between and within some African countries. Priority could be focused on removing policy constraints that impact both the movement of goods within countries and on trade across borders, such as lack of competition in the provision of transport and logistics services. In many African countries, transport cartels are still dominant and the cost of transportation is very high compared to other regions. Measures which improve the availability of information on prices both within and across countries could also have an important impact on reducing differences in the relative price of food in different markets. Nevertheless, measures to reduce transactions costs at the border, particularly in fragile states could have a large payoff in terms of facilitating trade in food products across markets. Finally, we raise the issue of whether the approach adopted here could be useful in identifying the impact of specific measures to reduce policy constraints to trade. If procedures at the border are improved we should expect to see a decline in relative prices and/or relative price variation between markets on either side of the border. Having monthly data would enable potential impacts to be closely linked to the time that the policy change was introduced. 17
18 References Aker, Jenny C., Klein, Michael W., O'Connell, Stephen A. and Yang, Muzhe, 2010 Borders, Ethnicity and Trade (May 2012). NBER Working Paper Buys, Piet, Uwe Deichmann, and David Wheeler "Road Network Upgrading and Overland Trade Expansion in Sub-Saharan Africa" Journal of African Economies 19(3): Buys, Piet, Uwe Deichmann, and David Wheeler "Road Network Upgrading and Overland Trade Expansion in Sub-Saharan Africa" Journal of African Economies 19(3): Ceglowski, Janet, 2003, The Law of One Price: Intranational Evidence for Canada, Canadian Journal of Economics, vol. 36, no. 2, pp Chen & William D. Nordhaus, "The Value of Luminosity Data as a Proxy for Economic Statistics," NBER Working Papers 16317, National Bureau of Economic Research. Chen, B, Intra-national versus international trade in the European Union: why do national borders matter? Journal of International Economics, 63: Engel, C., Rogers, J., How wide is the border? American Economic Review 86, December. Engel, C., Rogers, J., 2001 Deviations from Purchasing Power Parity: Causes and Welfare Costs. Journal of International Economics, 55: Engel, Charles & John Rogers, "Relative price volatility: what role does the border play?," International Finance Discussion Papers 623, Board of Governors of the Federal Reserve System. Engel, Charles; John H. Rogers; and Shing-Yi Wang, 2005, Revisiting the Border: An Assessment of the Law of One Price Using Very Disaggregated Consumer Price Data, in Exchange Rates, Capital Flows and Policy, Rebecca Driver, Peter Sinclair and Christoph Thoenissen, eds. (London: Routledge), Gopinath, Gita, Pierre-Olivier Gourinchas, Chang-Tai Hsieh & Nicholas Li, "Estimating the Border Effect: Some New Evidence," NBER Working Papers Gorodnichenko, Yuriy and Linda Tesar. Border Eff3ect or Country Effect? Seattle May Not Be so Far from Vancouver After All. American Economic Journal: Macroeconomics, 1(1):219{241, Grafe, Clement, Martin Raiser, and Toshiaki Sakatsume Beyond Borders - Reconsidering Regional Trade in Central Asia. Journal of Comparative Economics, 36:
19 Henderson, J. Vernon, Adam Storeygard, and David N. Weil Measuring Economic Growth from Outer Space. National Bureau of Economic Research Working Paper Michalopoulos, Stelios and Elias Papaioannou (2010), Divide and Rule or the Rule of the Divided? Evidence from Africa, CEPR Discussion Paper Morshed, A.M., What can we learn from a large border effect in developing countries? Journal of Development Economics 72, Morshed, A.M., 2007 Is There Really A `Border' Effect? Journal of International Money and Finance, 26(7): Nunn, Nathan (2008), The Long Term Effects of Africa s Slave Trades, Quarterly Journal of Economics, 123(1): Odedoku. M.O. Fulfilment of Purchasing Power Parities in Africa: The Differential Role of CFA and non-cfa membership. Journal of African Economies, 9(2):213{234, Parsley, David C., and Shang-Jin Wei Explaining the Border Effect: The Role of Exchange Rate Variability, Shipping Costs, and Geography. Journal of International Economics, 55(1): Stryker D., Study of Policy Options for Increasing Tanzanian Exports of Maize and Rice in East Africa While Improving Its Food Security to the Year 2025, Final Report, NAFAKA/AIRD. USAID (2013) Assessment of the Volumes and Value of Regionally Trade Staple Commodities, USAID West Africa Trade Hub, Paper presented at the Food Across Borders Conference, Accra January. Versailles, Bruno Market Integration and Border Effects in Eastern Africa. CSAE Working Paper WPS/
20 Price differences Figures and Tables for Food Prices, Road Infrastructure, and Border Effects in Central and Eastern Africa Figure 1: Towns and Road quality Figure 2. Distribution of price variables within countries (a) Distance-adjusted within countries relative prices BDIBDI DRCDRC KENKEN MWIMWI SDNSDN TZATZA ZMBZMB DJIDJI ETHETH MOZMOZ RWARWA SOMSOM UGAUGA (b) Distance-adjusted within countries relative price variations. 20
Assessing the impact of trade facilitation on SADC s intra-trade potential
Assessing the impact of trade facilitation on SADC s intra-trade potential Dr. Albert Makochekanwa Lecturer Department of Economics University of Zimbabwe Harare, Zimbabwe Email:almac772002@yahoo.couk
More informationImmigration and Internal Mobility in Canada Appendices A and B. Appendix A: Two-step Instrumentation strategy: Procedure and detailed results
Immigration and Internal Mobility in Canada Appendices A and B by Michel Beine and Serge Coulombe This version: February 2016 Appendix A: Two-step Instrumentation strategy: Procedure and detailed results
More informationDoes the G7/G8 Promote Trade? Volker Nitsch Freie Universität Berlin
February 20, 2006 Does the G7/G8 Promote Trade? Volker Nitsch Freie Universität Berlin Abstract The Group of Eight (G8) is an unofficial forum of the heads of state of the eight leading industrialized
More informationImmigration, Information, and Trade Margins
Immigration, Information, and Trade Margins Shan Jiang November 7, 2007 Abstract Recent theories suggest that better information in destination countries could reduce firm s fixed export costs, lower uncertainty
More informationAssessing the impact of trade facilitation on SADC s intra-trade potential
Assessing the impact of trade facilitation on SADC s intra-trade potential Dr. Albert Makochekanwa Lecturer Department of Economics University of Zimbabwe Harare, Zimbabwe Email:almac772002@yahoo.couk
More informationThe WTO Trade Effect and Political Uncertainty: Evidence from Chinese Exports
Abstract: The WTO Trade Effect and Political Uncertainty: Evidence from Chinese Exports Yingting Yi* KU Leuven (Preliminary and incomplete; comments are welcome) This paper investigates whether WTO promotes
More informationInstitutional Governance and Trade - The Case for COMESA Region
Institutional Governance and Trade - The Case for COMESA Region BY M A SHURA SHINGIRIRAI A F RICAN ECONOMIC CONFERENCE A DDIS A BABA, ETHIOPIA 4-6 DECEMBER 2 017 Outline of the Presentation 1. Introduction
More informationLabor Market Dropouts and Trends in the Wages of Black and White Men
Industrial & Labor Relations Review Volume 56 Number 4 Article 5 2003 Labor Market Dropouts and Trends in the Wages of Black and White Men Chinhui Juhn University of Houston Recommended Citation Juhn,
More informationResearch Report. How Does Trade Liberalization Affect Racial and Gender Identity in Employment? Evidence from PostApartheid South Africa
International Affairs Program Research Report How Does Trade Liberalization Affect Racial and Gender Identity in Employment? Evidence from PostApartheid South Africa Report Prepared by Bilge Erten Assistant
More informationPoverty Reduction and Economic Growth: The Asian Experience Peter Warr
Poverty Reduction and Economic Growth: The Asian Experience Peter Warr Abstract. The Asian experience of poverty reduction has varied widely. Over recent decades the economies of East and Southeast Asia
More informationHarnessing Regional Integration for Trade & Growth in Southern Africa How can regional integration be made to work for trade in goods & services?
Harnessing Regional Integration for Trade & Growth in Southern Africa How can regional integration be made to work for trade in goods & services? MAY/JUNE 2 011 Motivation New research on making trade
More informationThe Trade Liberalization Effects of Regional Trade Agreements* Volker Nitsch Free University Berlin. Daniel M. Sturm. University of Munich
December 2, 2005 The Trade Liberalization Effects of Regional Trade Agreements* Volker Nitsch Free University Berlin Daniel M. Sturm University of Munich and CEPR Abstract Recent research suggests that
More informationInternal Borders: Ethnic Diversity and Market Segmentation in Malawi
Internal Borders: Ethnic Diversity and Market Segmentation in Malawi Amanda Lea Robinson April 26, 2013 Prepared for the Working Group in African Political Economy National Meeting Massachusetts Institute
More informationLatin American Immigration in the United States: Is There Wage Assimilation Across the Wage Distribution?
Latin American Immigration in the United States: Is There Wage Assimilation Across the Wage Distribution? Catalina Franco Abstract This paper estimates wage differentials between Latin American immigrant
More informationA Global Economy-Climate Model with High Regional Resolution
A Global Economy-Climate Model with High Regional Resolution Per Krusell Institute for International Economic Studies, CEPR, NBER Anthony A. Smith, Jr. Yale University, NBER February 6, 2015 The project
More informationCorruption, Political Instability and Firm-Level Export Decisions. Kul Kapri 1 Rowan University. August 2018
Corruption, Political Instability and Firm-Level Export Decisions Kul Kapri 1 Rowan University August 2018 Abstract In this paper I use South Asian firm-level data to examine whether the impact of corruption
More informationNBER WORKING PAPER SERIES THE TRADE CREATION EFFECT OF IMMIGRANTS: EVIDENCE FROM THE REMARKABLE CASE OF SPAIN. Giovanni Peri Francisco Requena
NBER WORKING PAPER SERIES THE TRADE CREATION EFFECT OF IMMIGRANTS: EVIDENCE FROM THE REMARKABLE CASE OF SPAIN Giovanni Peri Francisco Requena Working Paper 15625 http://www.nber.org/papers/w15625 NATIONAL
More informationState Minimum Wage Rates and the Location of New Business: Evidence from a Refined Border Approach
State Minimum Wage Rates and the Location of New Business: Evidence from a Refined Border Approach Shawn Rohlin 1 Department of Economics and Center for Policy Research 426 Eggers Hall Syracuse University
More informationTrading Goods or Human Capital
Trading Goods or Human Capital The Winners and Losers from Economic Integration Micha l Burzyński, Université catholique de Louvain, IRES Poznań University of Economics, KEM michal.burzynski@uclouvain.be
More informationEthnic Diversity and Perceptions of Government Performance
Ethnic Diversity and Perceptions of Government Performance PRELIMINARY WORK - PLEASE DO NOT CITE Ken Jackson August 8, 2012 Abstract Governing a diverse community is a difficult task, often made more difficult
More informationDPRU WORKING PAPERS. The Determinants of Intra-Regional Trade in Southern Africa with Specific Reference to South African and the Rest of the Region
DPRU WORKING PAPERS The Determinants of Intra-Regional Trade in Southern Africa with Specific Reference to South African and the Rest of the Region Rashad Cassim No 01/51 June 2001 ISBN: 0-7992-2057-4
More informationTrade Facilitation and Trade Flows in Africa
Trade Facilitation and Trade Flows in Africa Abdoulaye Seck Faculté des Sciences Economiques et de Gestion Université Cheikh Anta Diop Dakar, Senegal Email: abdoulaye.seck@ucad.edu.sn April 13, 2014 Abstract
More informationRethinking the Area Approach: Immigrants and the Labor Market in California,
Rethinking the Area Approach: Immigrants and the Labor Market in California, 1960-2005. Giovanni Peri, (University of California Davis, CESifo and NBER) October, 2009 Abstract A recent series of influential
More informationMigration and Tourism Flows to New Zealand
Migration and Tourism Flows to New Zealand Murat Genç University of Otago, Dunedin, New Zealand Email address for correspondence: murat.genc@otago.ac.nz 30 April 2010 PRELIMINARY WORK IN PROGRESS NOT FOR
More informationAn Empirical Analysis of Pakistan s Bilateral Trade: A Gravity Model Approach
103 An Empirical Analysis of Pakistan s Bilateral Trade: A Gravity Model Approach Shaista Khan 1 Ihtisham ul Haq 2 Dilawar Khan 3 This study aimed to investigate Pakistan s bilateral trade flows with major
More informationNBER WORKING PAPER SERIES HOMEOWNERSHIP IN THE IMMIGRANT POPULATION. George J. Borjas. Working Paper
NBER WORKING PAPER SERIES HOMEOWNERSHIP IN THE IMMIGRANT POPULATION George J. Borjas Working Paper 8945 http://www.nber.org/papers/w8945 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge,
More informationGender preference and age at arrival among Asian immigrant women to the US
Gender preference and age at arrival among Asian immigrant women to the US Ben Ost a and Eva Dziadula b a Department of Economics, University of Illinois at Chicago, 601 South Morgan UH718 M/C144 Chicago,
More informationThe Determinants and the Selection. of Mexico-US Migrations
The Determinants and the Selection of Mexico-US Migrations J. William Ambrosini (UC, Davis) Giovanni Peri, (UC, Davis and NBER) This draft March 2011 Abstract Using data from the Mexican Family Life Survey
More informationBusiness Cycles, Migration and Health
Business Cycles, Migration and Health by Timothy J. Halliday, Department of Economics and John A. Burns School of Medicine, University of Hawaii at Manoa Working Paper No. 05-4 March 3, 2005 REVISED: October
More informationTHE BUSINESS CLIMATE INDEX SURVEY 2008
THE BUSINESS CLIMATE INDEX SURVEY 2008 Prepared by: The Steadman Group, Riverside Drive, P.O. Box 68230 00200 Nairobi, Tel: 44450190-6, October, 2008 1 Summary of Main Findings 1. Introduction In meeting
More informationTHE GENDER WAGE GAP AND SEX SEGREGATION IN FINLAND* OSSI KORKEAMÄKI TOMI KYYRÄ
THE GENDER WAGE GAP AND SEX SEGREGATION IN FINLAND* OSSI KORKEAMÄKI Government Institute for Economic Research (VATT), P.O. Box 269, FI-00101 Helsinki, Finland; e-mail: ossi.korkeamaki@vatt.fi and TOMI
More informationGLOBALISATION AND WAGE INEQUALITIES,
GLOBALISATION AND WAGE INEQUALITIES, 1870 1970 IDS WORKING PAPER 73 Edward Anderson SUMMARY This paper studies the impact of globalisation on wage inequality in eight now-developed countries during the
More informationExplaining the Deteriorating Entry Earnings of Canada s Immigrant Cohorts:
Explaining the Deteriorating Entry Earnings of Canada s Immigrant Cohorts: 1966-2000 Abdurrahman Aydemir Family and Labour Studies Division Statistics Canada aydeabd@statcan.ca 613-951-3821 and Mikal Skuterud
More informationTable A.2 reports the complete set of estimates of equation (1). We distinguish between personal
Akay, Bargain and Zimmermann Online Appendix 40 A. Online Appendix A.1. Descriptive Statistics Figure A.1 about here Table A.1 about here A.2. Detailed SWB Estimates Table A.2 reports the complete set
More informationCorruption and business procedures: an empirical investigation
Corruption and business procedures: an empirical investigation S. Roy*, Department of Economics, High Point University, High Point, NC - 27262, USA. Email: sroy@highpoint.edu Abstract We implement OLS,
More informationSkill Classification Does Matter: Estimating the Relationship Between Trade Flows and Wage Inequality
Skill Classification Does Matter: Estimating the Relationship Between Trade Flows and Wage Inequality By Kristin Forbes* M.I.T.-Sloan School of Management and NBER First version: April 1998 This version:
More informationDifferent Endowment or Remuneration? Exploring wage differentials in Switzerland
Different Endowment or Remuneration? Exploring wage differentials in Switzerland Oscar Gonzalez, Rico Maggi, Jasmith Rosas * University of California, Berkeley * University of Lugano University of Applied
More informationThe Impact of Interprovincial Migration on Aggregate Output and Labour Productivity in Canada,
The Impact of Interprovincial Migration on Aggregate Output and Labour Productivity in Canada, 1987-26 Andrew Sharpe, Jean-Francois Arsenault, and Daniel Ershov 1 Centre for the Study of Living Standards
More informationRemittances and the Brain Drain: Evidence from Microdata for Sub-Saharan Africa
Remittances and the Brain Drain: Evidence from Microdata for Sub-Saharan Africa Julia Bredtmann 1, Fernanda Martinez Flores 1,2, and Sebastian Otten 1,2,3 1 RWI, Rheinisch-Westfälisches Institut für Wirtschaftsforschung
More informationWorking Papers in Economics
University of Innsbruck Working Papers in Economics Foreign Direct Investment and European Integration in the 90 s Peter Egger and Michael Pfaffermayr 2002/2 Institute of Economic Theory, Economic Policy
More informationThe Causes of Wage Differentials between Immigrant and Native Physicians
The Causes of Wage Differentials between Immigrant and Native Physicians I. Introduction Current projections, as indicated by the 2000 Census, suggest that racial and ethnic minorities will outnumber non-hispanic
More informationThe Costs of Remoteness, Evidence From German Division and Reunification by Redding and Sturm (AER, 2008)
The Costs of Remoteness, Evidence From German Division and Reunification by Redding and Sturm (AER, 2008) MIT Spatial Economics Reading Group Presentation Adam Guren May 13, 2010 Testing the New Economic
More informationGENDER EQUALITY IN THE LABOUR MARKET AND FOREIGN DIRECT INVESTMENT
THE STUDENT ECONOMIC REVIEWVOL. XXIX GENDER EQUALITY IN THE LABOUR MARKET AND FOREIGN DIRECT INVESTMENT CIÁN MC LEOD Senior Sophister With Southeast Asia attracting more foreign direct investment than
More informationThe U.S. Role in the Food Aid Picture
The U.S. Role in the Food Aid Picture Shahla Shapouri USDA/Economic Research Service shapouri@ers.usda.gov Stacey Rosen USDA/Economic Research Service slrosen@ers.usda.gov Birgit Meade USDA/Economic Research
More information1. Introduction. The Stock Adjustment Model of Migration: The Scottish Experience
The Stock Adjustment Model of Migration: The Scottish Experience Baayah Baba, Universiti Teknologi MARA, Malaysia Abstract: In the many studies of migration of labor, migrants are usually considered to
More informationBenefit levels and US immigrants welfare receipts
1 Benefit levels and US immigrants welfare receipts 1970 1990 by Joakim Ruist Department of Economics University of Gothenburg Box 640 40530 Gothenburg, Sweden joakim.ruist@economics.gu.se telephone: +46
More informationRisk Sharing and Transaction Costs: Evidence from Kenya s Mobile Money Revolution. William Jack and Tavneet Suri
Risk Sharing and Transaction Costs: Evidence from Kenya s Mobile Money Revolution William Jack and Tavneet Suri Research Questions What is the role of the financial sector in development? How important
More informationOrganization of presentation
Measuring the impacts of trade barriers and market interventions on maize price instability: Evidence from Eastern and Southern Africa A. Chapoto and T. S. Jayne Regional Consultation Workshop on: The
More informationDeterminants of Intra-Industry Trade between Zimbabwe and its Trading Partners in the Southern African Development Community Region ( )
Journal of Social Sciences 5(1): 16-21, 2009 ISSN 1549-3652 2009 Science Publications Determinants of Intra-Industry Trade between Zimbabwe and its Trading Partners in the Southern African Development
More informationWhat drives trade in services? Lessons from the Nordics
WORKING PAPER 3/2017 What drives trade in services? Lessons from the Nordics Hildegunn Kyvik Nordås Economics ISSN 1403-0586 http://www.oru.se/institutioner/handelshogskolan-vid-orebrouniversitet/forskning/publikationer/working-papers/
More informationFamily Ties, Labor Mobility and Interregional Wage Differentials*
Family Ties, Labor Mobility and Interregional Wage Differentials* TODD L. CHERRY, Ph.D.** Department of Economics and Finance University of Wyoming Laramie WY 82071-3985 PETE T. TSOURNOS, Ph.D. Pacific
More informationEXPORT, MIGRATION, AND COSTS OF MARKET ENTRY EVIDENCE FROM CENTRAL EUROPEAN FIRMS
Export, Migration, and Costs of Market Entry: Evidence from Central European Firms 1 The Regional Economics Applications Laboratory (REAL) is a unit in the University of Illinois focusing on the development
More informationEffects of Immigrants on the Native Force Labor Market Outcomes: Examining Data from Canada and the US
Effects of Immigrants on the Native Force Labor Market Outcomes: Examining Data from Canada and the US By Matija Jančec Submitted to Central European University Department of Economics In partial fulfillment
More informationInternal Borders: Ethnic Diversity and Market Segmentation in Malawi
Internal Borders: Ethnic Diversity and Market Segmentation in Malawi Amanda Lea Robinson March 21, 2013 Draft Version: Comments welcome. Please do not cite or circulate. Abstract Understanding the impact
More informationTrends in Tariff Reforms and Trends in The Structure of Wages
Trends in Tariff Reforms and Trends in The Structure of Wages Sebastian Galiani Guido G. Porto November 2006 Abstract This paper provides new evidence on the impacts of trade reforms on the structure of
More informationExplaining differences in access to home computers and the Internet: A comparison of Latino groups to other ethnic and racial groups
Electron Commerce Res (2007) 7: 265 291 DOI 10.1007/s10660-007-9006-5 Explaining differences in access to home computers and the Internet: A comparison of Latino groups to other ethnic and racial groups
More informationThe wage gap between the public and the private sector among. Canadian-born and immigrant workers
The wage gap between the public and the private sector among Canadian-born and immigrant workers By Kaiyu Zheng (Student No. 8169992) Major paper presented to the Department of Economics of the University
More informationAID FOR TRADE CASE STORY: UK
AID FOR TRADE CASE STORY UK Negotiating the COMESA EAC SADC Tripartite FTA Date of submission: 31 st January 2011 Region: Country: Type: Author: Contact Details: Eastern and Southern Africa ESA Region
More informationAssessing the impact of trade facilitation on SADC s intra-trade potential
Assessing the impact of trade facilitation on SADC s intra-trade potential 1 Contents Abstract... 3 1 Introduction... 4 1.1 SADC s trade transaction costs... 5 3 Methodology... 9 3.1 Gravity model analytical
More information5A. Wage Structures in the Electronics Industry. Benjamin A. Campbell and Vincent M. Valvano
5A.1 Introduction 5A. Wage Structures in the Electronics Industry Benjamin A. Campbell and Vincent M. Valvano Over the past 2 years, wage inequality in the U.S. economy has increased rapidly. In this chapter,
More informationNBER WORKING PAPER SERIES IMMIGRANTS' COMPLEMENTARITIES AND NATIVE WAGES: EVIDENCE FROM CALIFORNIA. Giovanni Peri
NBER WORKING PAPER SERIES IMMIGRANTS' COMPLEMENTARITIES AND NATIVE WAGES: EVIDENCE FROM CALIFORNIA Giovanni Peri Working Paper 12956 http://www.nber.org/papers/w12956 NATIONAL BUREAU OF ECONOMIC RESEARCH
More informationYouth th and Employment in Africa: The Potential t, he the Problem, the Promise 2
Youth and Employment in Africa: The Potential, the Problem, the Promise 1 Youth and Employment in Africa: The Potential, the Problem, the Promise 2 Why youth? 62% of population in Africa is below 25 years
More informationEndogenous antitrust: cross-country evidence on the impact of competition-enhancing policies on productivity
Preliminary version Do not cite without authors permission Comments welcome Endogenous antitrust: cross-country evidence on the impact of competition-enhancing policies on productivity Joan-Ramon Borrell
More informationInequality of opportunities among children: how much does gender matter?
Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Inequality of opportunities among children: how much does gender matter? Alejandro Hoyos
More informationVolume 35, Issue 1. An examination of the effect of immigration on income inequality: A Gini index approach
Volume 35, Issue 1 An examination of the effect of immigration on income inequality: A Gini index approach Brian Hibbs Indiana University South Bend Gihoon Hong Indiana University South Bend Abstract This
More informationPart 1: Focus on Income. Inequality. EMBARGOED until 5/28/14. indicator definitions and Rankings
Part 1: Focus on Income indicator definitions and Rankings Inequality STATE OF NEW YORK CITY S HOUSING & NEIGHBORHOODS IN 2013 7 Focus on Income Inequality New York City has seen rising levels of income
More informationTHE IMPACT OF MODE IV ON TRADE IN GOODS IN THE SADC REGION: THE CASE OF SOUTH AFRICA. Albert Makochekanwa. November 2009.
THE IMPACT OF MODE IV ON TRADE IN GOODS IN THE SADC REGION: THE CASE OF SOUTH AFRICA Albert Makochekanwa November 2009 indigenous growth THE IMPACT OF MODE IV ON TRADE IN GOODS IN THE SADC REGION: THE
More informationImmigrant Legalization
Technical Appendices Immigrant Legalization Assessing the Labor Market Effects Laura Hill Magnus Lofstrom Joseph Hayes Contents Appendix A. Data from the 2003 New Immigrant Survey Appendix B. Measuring
More informationInternational Remittances and Brain Drain in Ghana
Journal of Economics and Political Economy www.kspjournals.org Volume 3 June 2016 Issue 2 International Remittances and Brain Drain in Ghana By Isaac DADSON aa & Ryuta RAY KATO ab Abstract. This paper
More informationGrowth, Inequality, and Poverty in Sub-Saharan Africa: Recent Progress in a Global Context
Growth, Inequality, and Poverty in Sub-Saharan Africa: Recent Progress in a Global Context Augustin Kwasi FOSU Institute of Statistical, Social and Economic Research (ISSER), University of Ghana, Legon,
More informationEnglish Deficiency and the Native-Immigrant Wage Gap
DISCUSSION PAPER SERIES IZA DP No. 7019 English Deficiency and the Native-Immigrant Wage Gap Alfonso Miranda Yu Zhu November 2012 Forschungsinstitut zur Zukunft der Arbeit Institute for the Study of Labor
More informationPolitical Economics II Spring Lectures 4-5 Part II Partisan Politics and Political Agency. Torsten Persson, IIES
Lectures 4-5_190213.pdf Political Economics II Spring 2019 Lectures 4-5 Part II Partisan Politics and Political Agency Torsten Persson, IIES 1 Introduction: Partisan Politics Aims continue exploring policy
More informationIN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA
IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA Mahari Bailey, et al., : Plaintiffs : C.A. No. 10-5952 : v. : : City of Philadelphia, et al., : Defendants : PLAINTIFFS EIGHTH
More informationIndustrial & Labor Relations Review
Industrial & Labor Relations Review Volume 60, Issue 3 2007 Article 5 Labor Market Institutions and Wage Inequality Winfried Koeniger Marco Leonardi Luca Nunziata IZA, University of Bonn, University of
More informationFull file at
Chapter 2 Comparative Economic Development Key Concepts In the new edition, Chapter 2 serves to further examine the extreme contrasts not only between developed and developing countries, but also between
More informationHuman capital transmission and the earnings of second-generation immigrants in Sweden
Hammarstedt and Palme IZA Journal of Migration 2012, 1:4 RESEARCH Open Access Human capital transmission and the earnings of second-generation in Sweden Mats Hammarstedt 1* and Mårten Palme 2 * Correspondence:
More informationChapter 3. SADC trade integration the effect of trade facilitation on sectoral trade: a quantitative analysis. Sonja Kurz, Thomas Otter, Felix Povel 1
Chapter 3 SADC trade integration the effect of trade facilitation on sectoral trade: Sonja Kurz, Thomas Otter, Felix Povel 1 1. Introduction Regional integration is seen by many policy makers all over
More informationApplied Econometrics and International Development Vol.7-2 (2007)
EDUCATION, DEVELOPMENT AND HEALTH EXPENDITURE IN AFRICA: A CROSS-SECTION MODEL OF 39 COUNTRIES IN 2000-2005 GUISAN, Maria-Carmen * EXPOSITO, Pilar Abstract This article analyzes the evolution of education,
More informationImmigrant-native wage gaps in time series: Complementarities or composition effects?
Immigrant-native wage gaps in time series: Complementarities or composition effects? Joakim Ruist Department of Economics University of Gothenburg Box 640 405 30 Gothenburg, Sweden joakim.ruist@economics.gu.se
More informationCENTRO STUDI LUCA D AGLIANO DEVELOPMENT STUDIES WORKING PAPERS N April Export Growth and Firm Survival
WWW.DAGLIANO.UNIMI.IT CENTRO STUDI LUCA D AGLIANO DEVELOPMENT STUDIES WORKING PAPERS N. 350 April 2013 Export Growth and Firm Survival Julian Emami Namini* Giovanni Facchini** Ricardo A. López*** * Erasmus
More informationThe Gravity Model on EU Countries An Econometric Approach
European Journal of Sustainable Development (2014), 3, 3, 149-158 ISSN: 2239-5938 Doi: 10.14207/ejsd.2014.v3n3p149 The Gravity Model on EU Countries An Econometric Approach Marku Megi 1 ABSTRACT Foreign
More informationCross-State Differences in the Minimum Wage and Out-of-state Commuting by Low-Wage Workers* Terra McKinnish University of Colorado Boulder and IZA
Cross-State Differences in the Minimum Wage and Out-of-state Commuting by Low-Wage Workers* Terra McKinnish University of Colorado Boulder and IZA Abstract The 2009 federal minimum wage increase, which
More informationONLINE APPENDIX: DELIBERATE DISENGAGEMENT: HOW EDUCATION
ONLINE APPENDIX: DELIBERATE DISENGAGEMENT: HOW EDUCATION CAN DECREASE POLITICAL PARTICIPATION IN ELECTORAL AUTHORITARIAN REGIMES Contents 1 Introduction 3 2 Variable definitions 3 3 Balance checks 8 4
More informationSupplemental Appendix
Supplemental Appendix Michel Beine a, Frédéric Docquier b and Hillel Rapoport c a University of Luxemburg and Université Libre de Bruxelles b FNRS and IRES, Université Catholique de Louvain c Department
More informationInternal Borders: Ethnic-Based Market Segmentation in Malawi
Internal Borders: Ethnic-Based Market Segmentation in Malawi Amanda Lea Robinson August 25, 2015 Assistant Professor of Political Science, The Ohio State University. Email: robinson.1012@osu.edu. I thank
More informationVULNERABILITY STUDY IN KAKUMA CAMP
EXECUTIVE BRIEF VULNERABILITY STUDY IN KAKUMA CAMP In September 2015, the World Food Programme (WFP) and the United Nations High Commissioner for Refugees (UNHCR) commissioned Kimetrica to undertake an
More informationUnreported Trade Flows and Gravity Equation. Estimation
Unreported Trade Flows and Gravity Equation Estimation Thomas Baranga May 15, 2009 Abstract Some widely used trade databases do not distinguish between zero and unreported trade flows. The number of unreported
More informationFall : Problem Set Four Solutions
Fall 2009 4.64: Problem Set Four Solutions Amanda Pallais December 9, 2009 Borjas Question 7-2 (a) (b) (c) (d) Indexing the minimum wage to in ation would weakly decrease inequality. It would pull up the
More informationLabor Market Performance of Immigrants in Early Twentieth-Century America
Advances in Management & Applied Economics, vol. 4, no.2, 2014, 99-109 ISSN: 1792-7544 (print version), 1792-7552(online) Scienpress Ltd, 2014 Labor Market Performance of Immigrants in Early Twentieth-Century
More informationEnglish Deficiency and the Native-Immigrant Wage Gap in the UK
English Deficiency and the Native-Immigrant Wage Gap in the UK Alfonso Miranda a Yu Zhu b,* a Department of Quantitative Social Science, Institute of Education, University of London, UK. Email: A.Miranda@ioe.ac.uk.
More informationProspects for Immigrant-Native Wealth Assimilation: Evidence from Financial Market Participation. Una Okonkwo Osili 1 Anna Paulson 2
Prospects for Immigrant-Native Wealth Assimilation: Evidence from Financial Market Participation Una Okonkwo Osili 1 Anna Paulson 2 1 Contact Information: Department of Economics, Indiana University Purdue
More informationWage Discrimination between White and Visible Minority Immigrants in the Canadian Manufacturing Sector
Université de Montréal Rapport de Recherche Wage Discrimination between White and Visible Minority Immigrants in the Canadian Manufacturing Sector Rédigé par: Lands, Bena Dirigé par: Richelle, Yves Département
More informationTrade and the Spillovers of Transnational Terrorism
Trade and the Spillovers of Transnational Terrorism José de Sousa a, Daniel Mirza b and Thierry Verdier c JEL-Classification: F12, F13 Keywords: terrorism, trade, security 1. Introduction Terrorist organizations,
More informationTrade Flows and Migration to New Zealand
Trade Flows and Migration to New Zealand David Law and John Bryant N EW Z EALAND T REASURY W ORKING P APER 04/## J UNE 2004 Treasury:625092v1 [473620-1] NZ TREASURY WORKING PAPER 04/## Trade Flows and
More informationIMPLICATIONS OF U.S. FREE TRADE AGREEMENT WITH SOUTH KOREA
JOURNAL OF ECONOMIC DEVELOPMENT 27 Volume 33, Number 1, June 2008 IMPLICATIONS OF U.S. FREE TRADE AGREEMENT WITH SOUTH KOREA RENAN ZHUANG AND WON W. KOO * North Dakota State University This paper examines
More informationTrade led Growth in Times of Crisis Asia Pacific Trade Economists Conference 2 3 November 2009, Bangkok. Session 11
Trade led Growth in Times of Crisis Asia Pacific Trade Economists Conference 2 3 November 2009, Bangkok Session 11 Revisiting Trade-Institution Nexus: A Comparative Analysis of South Asia and Global Commodity
More informationWhich Countries are Most Likely to Qualify for the MCA? An Update using MCC Data. Steve Radelet 1 Center for Global Development April 22, 2004
Which Countries are Most Likely to Qualify for the MCA? An Update using MCC Data Steve Radelet 1 Center for Global Development April 22, 2004 The Millennium Challenge Corporation has posted data for each
More informationUnemployment and underemployment data
Helpdesk Report Unemployment and underemployment data Laura Bolton Institute of development Studies 23 November 2016 Question Identify the number (absolute and as a proportion of the working age population)
More informationHow Facilitating Trade would benefit Trade in Sub-Saharan Africa
How Facilitating Trade would benefit Trade in Sub-Saharan Africa By Abdoulaye Seck 1 Faculté des Sciences Economiques et de Gestion Université Cheikh Anta Diop & Institut d Etudes Economiques et Sociales
More informationContext and State of play in the EPAs Negotiations in the SADC Region
Context and State of play in the EPAs Negotiations in the SADC Region Richard Kamidza Regional Trade Policy Advisor Hub & Spokes Project SADC Secretariat Private Bag 0095 Gaborone Botswana rkamidza@sadc.int
More information