Efficiency of India’s Agricultural Exports: A Stochastic Panel Analysis
07 Dec 2017-South Asia Economic Journal (SAGE PublicationsSage India: New Delhi, India)-Vol. 18, Iss: 2, pp 276-295
TL;DR: In this article, an empirical study employing various time-invariant and time-varying specifications of a stochastic gravity model of trade was conducted to identify the inefficiency component among the determinants of Indian agricultural export flows to 112 partner countries, over the years 2000-2013.
Abstract: This article is an empirical study employing various time-invariant and time-varying specifications of a stochastic gravity model of trade. It enumerates the inefficiency component among the determinants of Indian agricultural export flows to 112 partner countries, over the years 2000–2013. The panel study finds empirical support for high yet decreasing home country inefficiency or ‘behind-the-border’ constraints to trade. Also significance of regional groups ASEAN, SAFTA and Africa shows that trade policy concentrating on developing countries have been successful export policies. Thus, the export efficiency scores help in articulating future policy initiatives for diversification of the country’s exports according to the significance and level of efficiency of partners. Nevertheless, literal interpretations of the efficiency scores are sensitive to the nature of modelling and their specifications.
Citations
More filters
TL;DR: In Spanish: Hacia Una Economia Mundial: sugerencias para una politica economica internacional, Series Biblioteca de Economia No.7, Orbis, Barcelona, 1985, 242 p. as mentioned in this paper
Abstract: textabstractIn Dutch: Naar een Nieuwe Wereldeconomie: voorstellen voor een internationaal economisch beleid, Rotterdam University Press, Rotterdam, 1965, XV + 335 p.
In Spanish: Hacia Una Economia Mundial: sugerencias para una politica economica internacional, Series Biblioteca de Economia No.7, Orbis, Barcelona, 1985, 242 p.
294 citations
[...]
138 citations
TL;DR: In this paper, the authors investigated the effect of economic integration on agricultural export performance in West African economies using the gravity model of bilateral trade on the annual time series data straddling the period 1970 to 2016.
Abstract: The paper investigates the effect of economic integration on agricultural export performance in West African economies using the gravity model of bilateral trade on the annual time series data straddling the period 1970 to 2016. The empirical evidence is based on the pooled OLS and fixed effects estimator. We find that economic integration, as measured by trade openness, is a remarkably strong predictor of export performance in the region. We also examine the effect of geographical distance measured by effective nominal exchange rates and we find it has a negative effect on agricultural export performance. The paper recommends the adoption of a common currency to help mitigate exchange rate negativity that serves as resistance to trade in the region. Likewise, proactive agricultural research, extension and market driven strategies are strongly advocated for driven competition and economic efficiency within the regional agricultural sector.
13 citations
Cites methods from "Efficiency of India’s Agricultural ..."
...Data on agricultural trade export performance were obtained from WDI (Braha et al. 2017; Kumar 2010; Barma 2017; Sun and Li 2018; Campi and Duenas 2016; Arribas et al. 2009)....
[...]
TL;DR: In this paper , the authors examined the key determinants and efficiency of China's agricultural exports with its 114 importing countries by applying the Stochastic Frontier Analysis (SFA) on an augmented gravity model for the period of 2000-2019.
Abstract: This paper aims to examine the key determinants and efficiency of China’s agricultural exports with its 114 importing countries by applying the Stochastic Frontier Analysis (SFA) on an augmented gravity model for the period of 2000–2019. The Poisson Pseudo Maximum Likelihood (PPML) and the fixed effect models were also estimated simultaneously to confirm the robustness of our findings. The results reveal that China’s economic size (GDP) and its importing countries, the Belt and Road Initiative (BRI), common border, and the Chinese language positively determine China’s agricultural export flows. The results, on the other hand, also reveal that China’s agricultural export is adversely influenced by the income (per capita GDP) of China and its trade partners, currency depreciation, distance, and landlocked. On an average account, China has untapped the potential of 51% in its agriculture export with the countries used in this study. We provide policy suggestions as part of our study.
6 citations
3 citations
References
More filters
TL;DR: In this paper, the authors define the disturbance term as the sum of symmetric normal and (negative) half-normal random variables, and consider various aspects of maximum-likelihood estimation for the coefficients of a production function with an additive disturbance term of this sort.
8,058 citations
6,067 citations
Posted Content•
TL;DR: This article showed that the gravity model usually estimated does not correspond to the theory behind it and showed that national borders reduce trade between the US and Canada by about 44% while reducing trade among other industrialized countries by about 30%.
Abstract: The gravity model has been widely used to infer substantial trade flow effects of institutions such as customs unions and exchange rate mechanisms. McCallum [1995] found that the US-Canada border led to trade between provinces that is a factor 22 (2,200%) times trade between states and provinces, a spectacular puzzle in light of the low formal barriers on this border. We show that the gravity model usually estimated does not correspond to the theory behind it. We solve the 'border puzzle' by applying the theory seriously. We find that national borders reduce trade between the US and Canada by about 44%, while reducing trade among other industrialized countries by about 30%. McCallum's spectacular headline number is the result of a combination of omitted variables bias and the small size of the Canadian economy. Within-Canada trade rises by a factor 6 due to the border. In contrast, within-US trade rises 25%.
6,043 citations
TL;DR: In this paper, a stochastic frontier production function is defined for panel data on firms, in which the nonnegative technical inefficiency effects are assumed to be a function of firm-specific variables and time.
Abstract: A stochastic frontier production function is defined for panel data on firms, in which the non-negative technical inefficiency effects are assumed to be a function of firm-specific variables and time. The inefficiency effects are assumed to be independently distributed as truncations of normal distributions with constant variance, but with means which are a linear function of observable variables. This panel data model is an extension of recently proposed models for inefficiency effects in stochastic frontiers for cross-sectional data. An empirical application of the model is obtained using up to ten years of data on paddy farmers from an Indian village. The null hypotheses, that the inefficiency effects are not stochastic or do not depend on the farmer-specific variables and time of observation, are rejected for these data.
5,783 citations
"Efficiency of India’s Agricultural ..." refers background in this paper
...The ‘time-decay model’ (bc92) of Battese and Coelli (1992) and the ‘neutral technical inefficiency effects model’ (bc95) of Battese and Coelli (1995) are the models following this specification....
[...]
TL;DR: In this article, a method that consistently and efficiently estimates a theoretical gravity equation and correctly calculates the comparative statics of trade frictions was developed to solve the famous McCallum border puzzle.
Abstract: Gravity equations have been widely used to infer trade flow effects of various institutional arrangements. We show that estimated gravity equations do not have a theoretical foundation. This implies both that estimation suffers from omitted variables bias and that comparative statics analysis is unfounded. We develop a method that (i) consistently and efficiently estimates a theoretical gravity equation and (ii) correctly calculates the comparative statics of trade frictions. We apply the method to solve the famous McCallum border puzzle. Applying our method, we find that national borders reduce trade between industrialized countries by moderate amounts of 20-50 percent.
4,997 citations