IDEAS home Printed from https://ideas.repec.org/a/uii/journl/v10y2018i2p148-164.html
   My bibliography  Save this article

Determinants of Global Palm Oil Demand: A Gravity Approach

Author

Listed:
  • Rini Yayuk Priyati

    (The University of Western Australia and Universitas Terbuka, Indonesia)

Abstract

This paper reviews the determinants of global palm oil trade using the gravity model. This model helps to explain how the shift in demand for palm oil has affected trade flows among trading partners. We decompose the effects of growth in the regional markets, location, and the reduction in the palm oil price relative to other edible oils, on palm oil exports. We find that standard variables suggested by the gravity literature, such as the growth of GDP, GDP per capita, and location, are indeed important determinants of palm oil trade. Given the preceding results, we simulate whether the economic growth of Indonesia?s trading partners can explain the growth in palm oil export demand from Indonesia. The simulation results for top ten Indonesia?s trading partners suggest that the growth of palm oil imports is a great deal higher than the growth of income for all countries.

Suggested Citation

  • Rini Yayuk Priyati, 2018. "Determinants of Global Palm Oil Demand: A Gravity Approach," Economic Journal of Emerging Markets, Universitas Islam Indonesia, vol. 10(2), pages 148-164, Oktober.
    • Handle: RePEc:uii:journl:v:10:y:2018:i:2:p:148-164
    DOI: 10.20885/ejem.vol10.iss2.art4
    as

    Download full text from publisher

    File URL: https://journal.uii.ac.id/JEP/article/download/9751/8625
    Download Restriction: no
    File URL: https://journal.uii.ac.id/JEP/article/view/9751/8625
    Download Restriction: no
    File URL: https://libkey.io/10.20885/ejem.vol10.iss2.art4?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
    ---><---

    References listed on IDEAS

    as
    1. Zhou, Adrian & Thomson, Elspeth, 2009. "The development of biofuels in Asia," Applied Energy, Elsevier, vol. 86(Supplemen), pages 11-20, November.
    2. Olper, Alessandro & Raimondi, Valentina, 2008. "Agricultural market integration in the OECD: A gravity-border effect approach," Food Policy, Elsevier, vol. 33(2), pages 165-175, April.
    3. Yu, Tun-Hsiang (Edward) & Bessler, David A. & Fuller, Stephen W., 2006. "Cointegration and Causality Analysis of World Vegetable Oil and Crude Oil Prices," 2006 Annual meeting, July 23-26, Long Beach, CA 21439, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. D. J. Sanders & J. V. Balagtas & G. Gruere, 2014. "Revisiting the palm oil boom in South-East Asia: fuel versus food demand drivers," Applied Economics, Taylor & Francis Journals, vol. 46(2), pages 127-138, January.
    5. Peri, Massimo & Baldi, Lucia, 2010. "Vegetable oil market and biofuel policy: An asymmetric cointegration approach," Energy Economics, Elsevier, vol. 32(3), pages 687-693, May.
    6. Rini Yayuk Priyati & Rod Tyers, 2016. "Price Relationships in Vegetable Oil and Energy Markets," Economics Discussion / Working Papers 16-11, The University of Western Australia, Department of Economics.
    7. Peter Egger & Michael Pfaffermayr, 2003. "The proper panel econometric specification of the gravity equation: A three-way model with bilateral interaction effects," Empirical Economics, Springer, vol. 28(3), pages 571-580, July.
    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. Nur Ain Mohd Hassan & Kalsom Zakaria & Kamalrudin Mohamed Salleh & Siti Mashani Ahmad, 2023. "An empirical analysis of Malaysian palm oil export to world major palm oil importing countries:," Operations Research and Decisions, Wroclaw University of Science and Technology, Faculty of Management, vol. 33(1), pages 61-73.
    2. Adhikari, Shweta & Poudel, Dikshit & Gopinath, Munisamy, 2023. "Is Policy Greasing the Wheels of Global Palm Oil Trade?," Research on World Agricultural Economy, Nan Yang Academy of Sciences Pte Ltd (NASS), vol. 4(2), June.
    3. Adhikari, Shweta & Poudel, Dikshit & Munisamy, Gopinath, 2023. "Policy Effects on Global Palm Oil Trade: A Gravity Model Approach," 2023 Annual Meeting, July 23-25, Washington D.C. 335475, Agricultural and Applied Economics Association.

    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. Mohcine Bakhat & Klaas WŸrzburg, 2013. "Co-integration of Oil and Commodity Prices: A Comprehensive ApproachAbstract," Working Papers fa05-2013, Economics for Energy.
    2. Mohcine Bakhat & Klaas WŸrzburg, 2013. "Price Relationships of Crude Oil and Food Commodities," Working Papers fa06-2013, Economics for Energy.
    3. Karel Janda & Ladislav Kristoufek, 2019. "The relationship between fuel and food prices: Methods, outcomes, and lessons for commodity price risk management," CAMA Working Papers 2019-20, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    4. Filip, Ondrej & Janda, Karel & Kristoufek, Ladislav & Zilberman, David, 2019. "Food versus fuel: An updated and expanded evidence," Energy Economics, Elsevier, vol. 82(C), pages 152-166.
    5. Peri, Massimo & Baldi, Lucia, 2013. "The effect of biofuel policies on feedstock market: Empirical evidence for rapeseed oil prices in EU," Resource and Energy Economics, Elsevier, vol. 35(1), pages 18-37.
    6. Yoon, Seong-Min, 2022. "On the interdependence between biofuel, fossil fuel and agricultural food prices: Evidence from quantile tests," Renewable Energy, Elsevier, vol. 199(C), pages 536-545.
    7. Natanelov, Valeri & Alam, Mohammad J. & McKenzie, Andrew M. & Van Huylenbroeck, Guido, 2011. "Is there co-movement of agricultural commodities futures prices and crude oil?," Energy Policy, Elsevier, vol. 39(9), pages 4971-4984, September.
    8. Halimatussadiah, A. & Nainggolan, D. & Yui, S. & Moeis, F.R. & Siregar, A.A., 2021. "Progressive biodiesel policy in Indonesia: Does the Government's economic proposition hold?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 150(C).
    9. Serra, Teresa & Zilberman, David, 2013. "Biofuel-related price transmission literature: A review," Energy Economics, Elsevier, vol. 37(C), pages 141-151.
    10. Karakotsios, Achillefs & Katrakilidis, Constantinos & Kroupis, Nikolaos, 2021. "The dynamic linkages between food prices and oil prices. Does asymmetry matter?," The Journal of Economic Asymmetries, Elsevier, vol. 23(C).
    11. Peter Sephton & Janelle Mann, 2013. "Threshold Cointegration: Model Selection with an Application," Journal of Economics and Econometrics, Economics and Econometrics Society, vol. 56(2), pages 54-77.
    12. Bharathiraja, B. & Jayamuthunagai, J. & Sudharsanaa, T. & Bharghavi, A. & Praveenkumar, R. & Chakravarthy, M. & Yuvaraj, D., 2017. "Biobutanol – An impending biofuel for future: A review on upstream and downstream processing tecniques," Renewable and Sustainable Energy Reviews, Elsevier, vol. 68(P1), pages 788-807.
    13. Stijn Claessens & Danny Cassimon, 2007. "Empirical evidence on the new international aid architecture," WEF Working Papers 0026, ESRC World Economy and Finance Research Programme, Birkbeck, University of London.
    14. Festus Ebo Turkson, 2012. "Trade Agreements and Bilateral Trade in Sub-Saharan Africa: Estimating the Trade Effects of the EU-ACP PTA and RTAs," Discussion Papers 12/07, University of Nottingham, CREDIT.
    15. Guglielmo Caporale & Christophe Rault & Robert Sova & Anamaria Sova, 2009. "On the bilateral trade effects of free trade agreements between the EU-15 and the CEEC-4 countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(3), pages 573-573, October.
    16. Maria Cipollina & Luca De Benedictis & Luca Salvatici & Claudio Vicarelli, 2016. "Policy Measurement And Multilateral Resistance In Gravity Models," Working Papers LuissLab 16130, Dipartimento di Economia e Finanza, LUISS Guido Carli.
    17. Deborah Bentivoglio & Adele Finco & Mirian Rumenos Piedade Bacchi, 2016. "Interdependencies between Biofuel, Fuel and Food Prices: The Case of the Brazilian Ethanol Market," Energies, MDPI, vol. 9(6), pages 1-16, June.
    18. Mann, Janelle M., 2013. "Is there a Global Relationship Across Crude Oil Benchmarks?," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150368, Agricultural and Applied Economics Association.
    19. Cheng, Sheng & Cao, Yan, 2019. "On the relation between global food and crude oil prices: An empirical investigation in a nonlinear framework," Energy Economics, Elsevier, vol. 81(C), pages 422-432.
    20. Tule, Moses K. & Salisu, Afees A. & Chiemeke, Charles C., 2019. "Can agricultural commodity prices predict Nigeria's inflation?," Journal of Commodity Markets, Elsevier, vol. 16(C).

    More about this item

    Keywords

    Palm oil; trade; gravity model;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade

    Statistics

    Access and download statistics

    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:uii:journl:v:10:y:2018:i:2:p:148-164. See general information about how to correct material in RePEc.

    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: Ana Yuliani (email available below). General contact details of provider: https://journal.uii.ac.id/JEP/ .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.