Border effects on spatial price transmission between fresh tomato markets in Ghana and Burkina-Faso: Any case for promoting trans-border trade in West Africa?
AbstractCross-border trade in food commodities within sub-regional economic blocks in Sub-Sahara Africa (SSA) is believed to be faster, cheaper, more convenient and welfare-enhancing than overseas trade between SSA countries and the USA, EU and the BRIC countries. The difficulty of commodity arbitrage across international borders SSA is however a fundamental constraint to price transmission, market integration and the realisation of the welfare enhancing role of cross-border trade in Africa. This study examines the impact of border and distance on price transmission between tomato markets in Ghana and Burkina-Faso. Theanalysis applies a regime-switching vector error correction model to estimate semi-weekly, wholesale prices of tomato in four tomato markets in Ghana and a production centre in Burkina-Faso. Estimated parameters of price transmission contain evidence of border and distance effects. This is expected since high transfer costs, including cross-border tariffs are incurred by traders in moving tomato across the border. Moreover, the perishable nature of tomato, and the poor quality of roads and transportation facilities may imply additional costs of risks to arbitrageurs. The findings have both theoretical relevance and practical implications for facilitating cross-border trade in West Africa, especially for trade between landlocked countries like Burkina-Faso and coastal ones like Ghana. --
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Date of creation: 2011
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Price Transmission; Border; Tomato; Ghana; Burkina-Faso;
Find related papers by JEL classification:
- C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
- Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
- Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
- Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
- Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
This paper has been announced in the following NEP Reports:
- NEP-AFR-2011-11-07 (Africa)
- NEP-AGR-2011-11-07 (Agricultural Economics)
- NEP-ALL-2011-11-07 (All new papers)
- NEP-INT-2011-11-07 (International Trade)
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