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Title:Border effects on spatial price transmission between fresh tomato markets in Ghana and Burkina-Faso: Any case for promoting trans-border trade in West Africa? PDF Logo
Authors:Amikuzuno, Joseph
Issue Date:2011
Series/Report no.:IAMO Forum 2011 9
Abstract:Cross-border trade in food commodities within sub-regional economic blocks in Sub-Sahara Africa (SSA) is believed to be faster, cheaper, more convenient and welfare-enhancing than overseas trade between SSA countries and the USA, EU and the BRIC countries. The difficulty of commodity arbitrage across international borders SSA is however a fundamental constraint to price transmission, market integration and the realisation of the welfare enhancing role of cross-border trade in Africa. This study examines the impact of border and distance on price transmission between tomato markets in Ghana and Burkina-Faso. Theanalysis applies a regime-switching vector error correction model to estimate semi-weekly, wholesale prices of tomato in four tomato markets in Ghana and a production centre in Burkina-Faso. Estimated parameters of price transmission contain evidence of border and distance effects. This is expected since high transfer costs, including cross-border tariffs are incurred by traders in moving tomato across the border. Moreover, the perishable nature of tomato, and the poor quality of roads and transportation facilities may imply additional costs of risks to arbitrageurs. The findings have both theoretical relevance and practical implications for facilitating cross-border trade in West Africa, especially for trade between landlocked countries like Burkina-Faso and coastal ones like Ghana.
Subjects:Price Transmission
Border
Tomato
Ghana
Burkina-Faso
JEL:C32
Q11
Q13
Q17
Q18
Document Type:Conference Paper
Appears in Collections:IAMO Forum 2011: Will the "BRICs Decade" Continue? – Prospects for Trade and Growth

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