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?

Joseph Amikuzuno and Samuel Donkor

No 126173, 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil from International Association of Agricultural Economists

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 or the BRIC countries. The difficulty of commodity arbitrage across international borders in SSA is however a fundamental constraint to price transmission, market integration and realization 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. The analysis 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.

Keywords: International Relations/Trade; Marketing (search for similar items in EconPapers)
Pages: 18
Date: 2012-06-21
New Economics Papers: this item is included in nep-afr and nep-agr
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:iaae12:126173

DOI: 10.22004/ag.econ.126173

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