IDEAS home Printed from https://ideas.repec.org/a/eee/jfpoli/v41y2013icp103-111.html
   My bibliography  Save this article

Trade subsidies, export bans and price stabilization: Lessons of Bangladesh–India rice trade in the 2000s

Author

Listed:
  • Dorosh, Paul A.
  • Rashid, Shahidur

Abstract

During the world food price crisis of 2007–08, rice importing countries suffered through a sharp increase in international rice prices and disruptions in supply as several rice exporters restricted trade to mitigate their domestic price increases. Perhaps no country was more affected by these disruptions than Bangladesh. Our analysis shows that prior to the 2007 crisis, when Bangladesh imported an average of nearly 1 million tons of rice per year from India, domestic wholesale prices of rice in Bangladesh were co-integrated with import parity prices of subsidized Below Poverty Line (BPL) rice. When in mid-2007, India sharply curtailed exports, rice prices surged in Bangladesh.

Suggested Citation

  • Dorosh, Paul A. & Rashid, Shahidur, 2013. "Trade subsidies, export bans and price stabilization: Lessons of Bangladesh–India rice trade in the 2000s," Food Policy, Elsevier, vol. 41(C), pages 103-111.
  • Handle: RePEc:eee:jfpoli:v:41:y:2013:i:c:p:103-111
    DOI: 10.1016/j.foodpol.2013.05.001
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0306919213000523
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.foodpol.2013.05.001?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Dorosh, Paul A. & Dradri, Simon & Haggblade, Steven, 2009. "Regional trade, government policy and food security: Recent evidence from Zambia," Food Policy, Elsevier, vol. 34(4), pages 350-366, August.
    2. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    3. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
    4. Rashid, Shahidur & Cummings Jr., Ralph & Gulati, Ashok, 2007. "Grain Marketing Parastatals in Asia: Results from Six Case Studies," World Development, Elsevier, vol. 35(11), pages 1872-1888, November.
    5. Rashid, Shahidur & Gulati, Ashok & Cummings, Ralph Jr., 2008. "From parastatals to private trade: Lessons from Asian agriculture," Issue briefs 50, International Food Policy Research Institute (IFPRI).
    6. Derek Headey & Shenggen Fan, 2008. "Anatomy of a crisis: the causes and consequences of surging food prices," Agricultural Economics, International Association of Agricultural Economists, vol. 39(s1), pages 375-391, November.
    7. Dorosh, Paul A., 2001. "Trade Liberalization and National Food Security: Rice Trade between Bangladesh and India," World Development, Elsevier, vol. 29(4), pages 673-689, April.
    8. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    9. Johansen, Søren & Juselius, Katarina, 1992. "Testing structural hypotheses in a multivariate cointegration analysis of the PPP and the UIP for UK," Journal of Econometrics, Elsevier, vol. 53(1-3), pages 211-244.
    10. Johansen, Soren, 1995. "Identifying restrictions of linear equations with applications to simultaneous equations and cointegration," Journal of Econometrics, Elsevier, vol. 69(1), pages 111-132, September.
    11. Headey, Derek, 2011. "Rethinking the global food crisis: The role of trade shocks," Food Policy, Elsevier, vol. 36(2), pages 136-146, April.
    12. Timmer, C. Peter, 2010. "Reflections on food crises past," Food Policy, Elsevier, vol. 35(1), pages 1-11, February.
    13. Rashid, Shahidur & Gulati, Ashok & Cummings, Ralph Jr. (ed.), 2008. "From parastatals to private trade: Lessons from Asian agriculture," IFPRI books, International Food Policy Research Institute (IFPRI), number 978-0-8018-8815-1, Winter.
    14. Ahmed, Nazneen & Bakht, Zaid & Dorosh, Paul A. & Shahabuddin, Quazi, 2007. "Distortions to Agricultural Incentives in Bangladesh," Agricultural Distortions Working Paper Series 48481, World Bank.
    15. Paul Dorosh, 2009. "Price stabilization, international trade and national cereal stocks: world price shocks and policy response in South Asia," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 1(2), pages 137-149, June.
    16. Boswijk, Peter & Franses, Philip Hans, 1992. "Dynamic Specification and Cointegration," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 54(3), pages 369-381, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ashrafun Nahar & Jeff Luckstead & Eric J. Wailes & Mohammad Jahangir Alam, 2018. "An assessment of the potential impact of climate change on rice farmers and markets in Bangladesh," Climatic Change, Springer, vol. 150(3), pages 289-304, October.
    2. Zhang, Xiaobo & Rashid, Shahidur & Ahmad, Kaikaus & Ahmed, Akhter, 2014. "Escalation of Real Wages in Bangladesh: Is it the Beginning of Structural Transformation?," World Development, Elsevier, vol. 64(C), pages 273-285.
    3. G.M. Monirul Alam & Khorshed Alam & Shahbaz Mushtaq, 2018. "Drivers of Food Security of Vulnerable Rural Households in Bangladesh," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 19(1), pages 43-63, March.
    4. Traverso, Silvio & Schiavo, Stefano, 2020. "Fair trade or trade fair? International food trade and cross-border macronutrient flows," World Development, Elsevier, vol. 132(C).
    5. Burhan Ahmad & Ole Gjølberg, 2015. "Are Pakistan’s Rice Markets Integrated Domestically and With the International Markets?," SAGE Open, , vol. 5(3), pages 21582440155, July.
    6. Serge Savary & Sonia Akter & Conny Almekinders & Jody Harris & Lise Korsten & Reimund Rötter & Stephen Waddington & Derrill Watson, 2020. "Mapping disruption and resilience mechanisms in food systems," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 12(4), pages 695-717, August.
    7. Rude, James & An, Henry, 2015. "Explaining grain and oilseed price volatility: The role of export restrictions," Food Policy, Elsevier, vol. 57(C), pages 83-92.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dorosh, Paul A. & Rashid, Shahidur, 2012. "Bangladesh rice trade and price stabilization: Implications of the 2007/08 experience for public stocks," IFPRI discussion papers 1209, International Food Policy Research Institute (IFPRI).
    2. Urbain, Jean-Pierre, 1995. "Partial versus full system modelling of cointegrated systems an empirical illustration," Journal of Econometrics, Elsevier, vol. 69(1), pages 177-210, September.
    3. Rashid, Shahidur, 2002. "Dynamics of agricultural wage and rice price in Bangladesh," MSSD discussion papers 44, International Food Policy Research Institute (IFPRI).
    4. Panayiotis Diamantis & Dimitris Georgoutsos & George Kouretas, 2001. "The Monetary Approach in the Presence of I(2) Components: A Cointegration Analysis of the Official and Black Market for Foreign Currency in Latin America," Working Papers 0108, University of Crete, Department of Economics.
    5. Norman J. Morin, 2006. "Likelihood ratio tests on cointegrating vectors, disequilibrium adjustment vectors, and their orthogonal complements," Finance and Economics Discussion Series 2006-21, Board of Governors of the Federal Reserve System (U.S.).
    6. H. Peter Boswijk & Jurgen A. Doornik, 2004. "Identifying, estimating and testing restricted cointegrated systems: An overview," Statistica Neerlandica, Netherlands Society for Statistics and Operations Research, vol. 58(4), pages 440-465, November.
    7. Dimitris Georgoutsos & George Kouretas, 2001. "Common Stochastic Trends In International Stock Markets: Testing In An Integrated Framework," Working Papers 0104, University of Crete, Department of Economics.
    8. Dorosh, Paul A. & Childs, Abigail, 2014. "International rice trade and security stocks: Prospects for an expanded Asian international rice reserve:," IFPRI discussion papers 1394, International Food Policy Research Institute (IFPRI).
    9. M. T. Alguacil & V. Orts, 2003. "Inward Foreign Direct Investment and Imports in Spain," International Economic Journal, Taylor & Francis Journals, vol. 17(3), pages 19-38.
    10. Jacobson, Tor & Ohlsson, Henry, 1994. "Long-Run Relations between Private and Public Sector Wages in Sweden," Empirical Economics, Springer, vol. 19(3), pages 343-360.
    11. Selahattin Dibooglu, 1997. "Accounting for US current account deficits: an empirical investigation," Applied Economics, Taylor & Francis Journals, vol. 29(6), pages 787-793.
    12. M. Hashem Pesaran & Yongcheol Shin, 2002. "Long-Run Structural Modelling," Econometric Reviews, Taylor & Francis Journals, vol. 21(1), pages 49-87.
    13. Eleni Constantinou & Avo Kazandjian & Georgios P. Kouretas & Vera Tahmazian, 2008. "Common Stochastic Trends Among The Cyprus Stock Exchange And The Ase, Lse And Nyse," Bulletin of Economic Research, Wiley Blackwell, vol. 60(4), pages 327-349, October.
    14. Pedro Hugo Clavijo Cortes, 2017. "Balance comercial y volatilidad del tipo de cambio nominal: Un estudio de series de tiempo para Colombia," Revista Economía y Región, Universidad Tecnológica de Bolívar, vol. 11(1), pages 37-58, June.
    15. Song, Chi-Young, 1997. "The Real Exchange Rate and the Current Account Balance in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 11(2), pages 143-184, June.
    16. Murthy, N. R. Vasudeva & Phillips, Joseph M., 1996. "The relationship between budget deficits and capital inflows: Further econometric evidence," The Quarterly Review of Economics and Finance, Elsevier, vol. 36(4), pages 485-494.
    17. MacDonald, Ronald & Marsh, Ian W., 2004. "Currency spillovers and tri-polarity: a simultaneous model of the US dollar, German mark and Japanese yen," Journal of International Money and Finance, Elsevier, vol. 23(1), pages 99-111, February.
    18. Song, Nianfu & Chang, Sun Joseph & Aguilar, Francisco X., 2011. "U.S. softwood lumber demand and supply estimation using cointegration in dynamic equations," Journal of Forest Economics, Elsevier, vol. 17(1), pages 19-33, January.
    19. Houssem Eddine Chebbi & Marcelo Olarreaga & Habib Zitouna, 2011. "Trade Openness Andco2emissions In Tunisia," Middle East Development Journal (MEDJ), World Scientific Publishing Co. Pte. Ltd., vol. 3(01), pages 29-53.
    20. Peijie Wang & Colin Lizieri & George Matysiak, 1997. "Information asymmetry, long-run relationship and price discovery in property investment markets," The European Journal of Finance, Taylor & Francis Journals, vol. 3(3), pages 261-275.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jfpoli:v:41:y:2013:i:c:p:103-111. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: http://www.elsevier.com/locate/foodpol .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/foodpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.