SPATIAL integration of the rice market: emprirical evidence from mid-west and far-west Nepal and the Nepalese-Indian border
AbstractThis paper studies the integration of rice markets in the mid-west and far-west districts of Nepal. The data were drawn mainly from the World Food Programme (WFP) database on Nepal. Results indicate that the rice markets of the hinterland are poorly integrated with the regional market of Nepalgunj. In contrast, price fluctuations are transmitted, both in the short and medium run, across the Indian-Nepali border between Nepalgunj and the Indian border districts of Rupedia and Jogbani. Large price differentials relative to transport costs indicate market inefficiencies in the mid-west and far-west districts of Nepal. Moreover, the poor road infrastructure determines the price differentials. Poor infrastructure impedes price correlation and convergence between these districts. Given its opendoor policy with India and the ongoing efforts to further align trade policies with the World Trade Organization, the findings suggest that Nepal would maintain its partnership with India and build an effective market surveillance system that covers the Indian border markets as well, to ensure food security in the short run. However, substantial investment in transport infrastructure is required to improve market integration and accessibility in the long run, especially in the hilly and mountainous areas.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 14488.
Date of creation: 2008
Date of revision:
Publication status: Published in Asian Journal of Agriculture and Development 1.4(2008): pp. 139-156
Rice; market integration; Nepal; India;
Find related papers by JEL classification:
- F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
- C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
- D40 - Microeconomics - - Market Structure and Pricing - - - General
- O19 - Economic Development, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
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