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Demand for cereal grains in Asia: The effect of urbanization

Listed author(s):
  • Huang, Jikun
  • David, Cristina C.

This paper analyzes the effects of urbanization on demand for cereal grains - rice, wheat, and coarse grains - in nine Asian countries. A complete demand system (Almost Ideal Demand System in linear form) is estimated in two stages based on aggregate time series data from 1960 to 1988. In the high-income countries, i.e. Japan and South Korea, urbanization was observed to significantly reduce demand for cereal grains. In the lower-income countries, demand for cereal grains either increased or remained the same with urbanization. Among cereal grains, urbanization has had negative effects on demand for rice and coarse grains, but consistently positive effects on demand for wheat. Only Japan and Thailand among the countries studied have negative income elasticities of demand for total cereal grains and for rice in particular. Hence, rice remains a necessity and a normal good in most Asian countries. Previous estimates of income elasticities of rice based on time-series aggregate data tend to be lower than those based on cross-section household level data. When urbanization is explicitly specified in the demand model, the estimates of income elasticities from time-series data turn out to be consistent with those from cross-section data.

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Article provided by Blackwell in its journal Agricultural Economics.

Volume (Year): 8 (1993)
Issue (Month): 2 (February)
Pages: 107-124

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Handle: RePEc:eee:agecon:v:8:y:1993:i:2:p:107-124
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  1. Paulino, Leonardo A. & Tseng, Shen Sheng, 1980. "A comparative study of FAO and USDA data on production, area, and trade of major food staples:," Research reports 19, International Food Policy Research Institute (IFPRI).
  2. Ingco, Merlinda D., 1990. "Changes in food consumption patterns in the Republic of Korea," Policy Research Working Paper Series 506, The World Bank.
  3. Shoichi Ito & E. Wesley F. Peterson & Warren R. Grant, 1989. "Rice in Asia: Is It Becoming an Inferior Good?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(1), pages 32-42.
  4. C. Peter Timmer & Harold Alderman, 1979. "Estimating Consumption Parameters for Food Policy Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 61(5), pages 982-987.
  5. Quisumbing, Agnes R. & Valerio, Teresita E. & Red, Evangeline R. & Villavieja, Gracia M., 1988. "Flexible Functional Form Estimates of Philippine Demand Elasticities for Nutrition Policy Simulation," Working Papers WP 1988-13, Philippine Institute for Development Studies.
  6. Berndt, Ernst R & Savin, N Eugene, 1975. "Estimation and Hypothesis Testing in Singular Equation Systems with Autoregressive Disturbances," Econometrica, Econometric Society, vol. 43(5-6), pages 937-957, Sept.-Nov.
  7. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-326, June.
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