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Direction of Trade in Indian Pepper Exports: A Markov Chain Approach


  • R V Sujatha
  • Y Eswara Prasad


Under the World Trade Organization (WTO) regime, countries hitherto inactive without any domestic market in the spice trade have emerged as producers, posing a substantial threat to traditional exporters like India. Against this scenario, this study attempts to examine the direction of pepper trade that will determine the status of Indian pepper in the world market and also help in formulating alternative management strategies and polices to boost exports from India. This study is designed to address the performance of Indian pepper during the two time periods viz., pre-WTO (1981-82 to 1994-95) and post-WTO (1995-96 to 2003-04). This study concludes that the US and the USSR were stable export markets for Indian pepper during pre-WTO period reflected by the high retention probabilities, but Canada had a moderate probability of retention. On the contrary, Italy and Germany had a probability of zero retention indicating that they were unstable importers of pepper during pre-WTO period as well as post-WTO period. But, during post-WTO period, Canada and the US remained comparatively stable markets for Indian pepper. The disintegration of USSR and the consequent reduction in the purchasing power of these countries led to a very low probability of retention by the erstwhile USSR countries. Finally, this study suggests that there are a number of approaches to remove impediments from day-to-day export business apart from quality improvement and value addition.

Suggested Citation

  • R V Sujatha & Y Eswara Prasad, 2008. "Direction of Trade in Indian Pepper Exports: A Markov Chain Approach," The IUP Journal of Agricultural Economics, IUP Publications, vol. 0(2), pages 22-30, April.
  • Handle: RePEc:icf:icfjag:v:05:y:2008:i:2:p:22-30

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    References listed on IDEAS

    1. Harvey, Andrew & Koopman, Siem Jan & Riani, Marco, 1997. "The Modeling and Seasonal Adjustment of Weekly Observations," Journal of Business & Economic Statistics, American Statistical Association, vol. 15(3), pages 354-368, July.
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    4. Randal R. Rucker & Walter N. Thurman & Jonathan K. Yoder, 2005. "Estimating the Structure of Market Reaction to News: Information Events and Lumber Futures Prices," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(2), pages 482-500.
    5. Ana I. Sanjuán & P. J. Dawson, 2003. "Price transmission, BSE and structural breaks in the UK meat sector," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 30(2), pages 155-172, June.
    6. Timothy J. Richards & Paul M. Patterson, 2005. "Retail Price Fixity as a Facilitating Mechanism," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(1), pages 85-102.
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