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Border Price Shocks, Spatial Price Variation, and their Impacts on Poverty in Uganda

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  • Ole Boysen

    ()
    (Institute for International Integration Studies, Trinity College Dublin
    Department of Economics, Trinity College Dublin)

Abstract

How does an increase in food prices at the border impact poverty in Uganda given the strong spatial heterogeneity of the country and its limited domestic transportation and communication networks? Recently, a number of studies on the impact of international food prices on poverty in developing countries have been published. However, the role of spatial price transmission in this context remains largely unexplored. This paper targets that niche. We assess the spatial variability and transmission of prices through the analysis of time series and household data using descriptive statistics and regression methods. Subsequently, we apply the findings in a simulation experiment to determine the first-order poverty impacts of a hypothetical 50% increase in border prices for food under the assumption of imperfect spatial price transmission. The poverty results show impacts substantially different from those of a perfect price transmission scenario and also display strong regional differentiation.

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Bibliographic Info

Paper provided by IIIS in its series The Institute for International Integration Studies Discussion Paper Series with number iiisdp306.

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Length: 33 pages
Date of creation: Nov 2009
Date of revision:
Handle: RePEc:iis:dispap:iiisdp306

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Keywords: Uganda; food prices; poverty; spatial price transmission;

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  1. Krivonos, Ekaterina & Olarreaga, Marcelo, 2006. "Sugar prices, labor income, and poverty in Brazil," Policy Research Working Paper Series 3874, The World Bank.
  2. Rashid, Shahidur, 2004. "Spatial integration of maize markets in post-liberalized Uganda," MTID discussion papers 71, International Food Policy Research Institute (IFPRI).
  3. Bart Capéau & Stefan Dercon, 1998. "Prices, Unit Values and Local Measurement Units in Rural Surveys: an Econometric Approach with an Application to Poverty Measurement in Ethiopia," Center for Economic Studies - Discussion papers ces9818, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
  4. Todd Benson & Samuel Mugarura & Kelly Wanda, 2008. "Impacts in Uganda of rising global food prices: the role of diversified staples and limited price transmission," Agricultural Economics, International Association of Agricultural Economists, vol. 39(s1), pages 513-524, November.
  5. Fackler, Paul L. & Goodwin, Barry K., 2001. "Spatial price analysis," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 17, pages 971-1024 Elsevier.
  6. Joseph, George & Wodon, Quentin, 2008. "Assessing the potential impact on poverty of rising cereals prices : the case of Mali," Policy Research Working Paper Series 4744, The World Bank.
  7. Marcel Fafchamps & Ruth Hill & Aliziki Kaudha, 2004. "The Transmission of International Commodity Prices to Domestic Producers," Development and Comp Systems 0409038, EconWPA.
  8. Christine Moser & Christopher Barrett & Bart Minten, 2009. "Spatial integration at multiple scales: rice markets in Madagascar," Agricultural Economics, International Association of Agricultural Economists, vol. 40(3), pages 281-294, 05.
  9. Ivanic, Maros & Martin, Will, 2008. "Implications of higher global food prices for poverty in low-income countries," Policy Research Working Paper Series 4594, The World Bank.
  10. Ole Boysen and Alan Matthews, 2008. "Poverty Impacts of an Economic Partnership Agreement between Uganda and the EU," The Institute for International Integration Studies Discussion Paper Series iiisdp261, IIIS.
  11. James G. MacKinnon, 2010. "Critical Values for Cointegration Tests," Working Papers 1227, Queen's University, Department of Economics.
  12. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-66, May.
  13. Nicita, Alessandro, 2004. "Who benefited from trade liberalization in Mexico? Measuring the effects on household welfare," Policy Research Working Paper Series 3265, The World Bank.
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