Determinants of Intra-GCC Food Trade

Using panel data for six Gulf Cooperation Council (GCC) countries from 1995–2014, we assess the impacts of several major economic variables on intra-GCC food exports, and on GCC food exports to the world. The GCC customs union had minimal impact on intra-GCC food exports, but occasioned a significant reduction in GCC food exports. Unlike GCC food exports, intra-GCC food exports occurred among countries with similar relative factor endowments, in agreement with the Linder Hypothesis. Rising incomes and exchange rates played significant roles in both intra-GCC food exports and GCC food exports, while distance has lost its once-dominant role.     

Does Trade,Technology, or Education Expel Traditional Sectors? Some Evidence from the Collapse of the Silk Sector in South Korea*

Rapid economic growth and development often drives out traditional activities. We determine how increased trade, technology, and access to education in South Korea led to the collapse of its silk sector. Results show that although the imports of silk yarn and fabric reduced domestic silk output and prices, trade liberalization was not the sole contributor to the collapse. Inelastic labor demand for unskilled workers, skill‐biased technology, and especially increased access to education all led to a sharp rise in the relative wage of unskilled workers, and the ensuing rise in production costs contributed to the silk sector's collapse.     

Strategic Trade Policies Under Monopsony and Uncertainty: The Exporter’s Non-Linear Responses Based on the Organization of Its Industry

Players’ access to information, their market power, and the timing and rationale of their decisions are important but often neglected in the making of strategic trade policies. I examine optimal decisions in a monopsonistic market with asymmetric information to determine an exporting country’s policy strategies. The large importing country first sets a producer subsidy and later imposes an import tariff after learning about the welfare-maximizing exporter’s reactions to the subsidy. I assume that at the time of their decisions, the n exporting firms have incomplete information and rely only on noisy signals from their own domestic market to account for the uncertainty in the international market. I find that import tariff and producer subsidy can be substitute rather than exclusively independent policies. Results also show that the exporting country’s optimal reaction is non-linear and is based on the structure of its export industry; the exporting country’s government facing a large importer subsidizes (or taxes) its export when the number of exporting firms is low (or high) relative to a threshold number of firms. More important, before giving out subsidies, the exporting country’s government requires more collusion of its firms especially when the large importer targets a fixed domestic price.     

The impact of agricultural policy distortions on the productivity gap: Evidence from rice production

This article explores how production and trade policy distortions affected rice productivity in 33 rice-producing countries. A rice-productivity index is constructed, and a model linking the productivity gap with policy distortions is presented. After controlling for the differences in infrastructure, access to inputs and equipment, openness, and human capital, this article shows that high levels of rice subsidies and protection in rich countries combined with taxation of rice farming in poor countries widened the gap in rice productivity between rich and poor rice countries.     

Trade with Endogenous Market Power Under Asymmetric and Incomplete Information

This paper addresses whether or not trade under both asymmetric information and endogenous market power fits standard assumptions and outcomes of mechanism design of imperfect competition. I analyse the outcomes of a bilateral trade in which a manufacturer (the principal) purchases n inputs from a seller (the agent). Each input has a continuum of types, but the principal has no information on these input types, excepting their distributions. The model allows input types to shift input supply curves and flexibly accounts for any endogenous monopsony power (i.e., determined by the mechanism). Focusing on an optimal Bayesian mechanism, I find that the monotonicity assumption may not be enough to ensure price discrimination based on type. Truthful implementation implies that when allocation is increasing and weakly convex (curvature zero or positive) in the input type, the principal’s monopsony power decreases as the input type increases (i.e., is higher near competitive price for higher input type). However, under increasing but concave allocation, ambiguity remains as it is no longer guaranteed that high types would receive high prices. I also examine some extensions of the analysis in the cases of a benevolent principal and a mechanism with multiple agents. The findings provide explanation to real-world situations where input attribute affects market power of either player and to the functioning of many markets of goods and services under asymmetric and incomplete information.     

Income diversification,wealth, education and well-being in rural south-western Madagascar: Results from the Mahafaly region

Rural households in the Mahafaly region of south-western Madagascar have to contend with low economic development and a risky natural environment. A survey of 665 households in the region was designed to address three research questions: what is the relationship between diversification of income sources and household wealth; how does education influence access to non-farm income sources and diversification; and how does household wealth and diversification affect well-being? The results show that the overwhelming majority of households follow a diversification strategy. Household wealth is associated with larger fields, greater crop diversity and higher diversification of income source categories. Education enhances access to high-return, non-farm income sources. Self-reported well-being is positively affected by both wealth and diversification. Better education and measures to improve inhabitants’ existing strategies for compensation of yield losses in farming are crucial for securing local livelihoods in the face of decreasing precipitation due to climate change.     

Competitiveness and trade potential of India’s dairy industry

India has become the world’s largest milk producer but its dairy industry lacks market access. This paper determines how world dairy policy reforms would affect dairy production and trade in India and the competitiveness of its dairy industry. We measure nominal protection coefficient for India’s dairy products to determine level and change in competitiveness between 1975 and 2001. We estimate parameters of domestic demand for and supply of raw milk and whole milk powder to determine how a world price increase would affect domestic milk production and whole milk powder exports. Results show that India’s dairy products lack export competitiveness. But with less distorted world dairy markets, India could be competitive and would emerge as a net exporter of whole milk powder, benefiting dairy industries and milk producers in India.