Empirical analysis of US bilateral corn trade: Evidence from Japan, Mexico, China, South Korea, and the European Union

Prince Fosu, Thomas I. Wahl and Evan Lau

Cogent Economics & Finance, 2020, vol. 8, issue 1, 1783128

Abstract: Aggregate export supply function for US corn and bilateral import functions for US corn by Mexico, Japan, China, South Korea, and the EU are estimated using ARDL estimation techniques. The findings of the study show that export price, technology, and lagged exports impact positively on US corn exports, while real effective exchange rates and ethanol production negatively impact US corn export. In addition, the current import price had a negative effect on Mexico, China, and the EU demand for US corn. However, for Japan and South Korea, it is the previous price that negatively affects corn import. More so, livestock production, NAFTA and WTO involvement positively affected corn import by all importing countries. Also, the Chinese population positively impacted corn import from the US. GDP in Mexico, Japan, South Korea, and the EU had a positive effect on corn imports, while China’s GDP impacted negatively on corn imports. More so, the US has a more price elastic supply of corn. Mexico, Japan, South Korea, and the EU have price inelastic demand for US corn, while China has price elastic demand suggesting China is very price sensitive. The results of this study have important implications for global corn trade and the US economy. The results suggest that increases in livestock production in all importing countries could lead to a significant increase in demand for U.S. corn. Also, policies that enhance NAFTA and WTO could lead to a dramatic increase in demand for U.S. corn.

Date: 2020
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DOI: 10.1080/23322039.2020.1783128

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