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Paper# 19108

The article investigates the duration of comparative advantage indices in the European Union (EU-27) agri-food exports using the normalised revealed comparative advantage index on the global market. There is employed both a descriptive analysis of the duration of comparative advantage, and examined the major drivers using discrete-time duration models with proper controls for unobserved heterogeneity. The robustness of the models is tested with alternative estimation procedures and sub-samples. Estimations show that the comparative advantages for most agri-food products survived for a certain number of years, but a high percentage of them have a shorter duration. Larger trade costs decrease the probability of survival in comparative advantages, while the level of economic development, the size of the country, the agri-food export diversification, and being a new EU member state increases it. Implications for the EU-27 member states and agri-food policies are suggested in the conclusion.

The purpose of this research is to provide insight into the export competitiveness of wine of the 38 countries on global markets. Four revealed comparative advantage indices are used to analyze the levels, evolutions in patterns of development in the export competitiveness of wine and their drivers over the analysed years of 2000 to 2013. The revealed comparative advantages on the global markets are the most robust for France, Italy, Spain, Chile, Australia and United States. Our estimations suggest a divergence in comparative advantage over time at the world market. The results show that GDP and exchange rates have negative effects on the wine export competitiveness, while agricultural employment, grape area harvested and WTO memberships are positively associated with comparative advantages. Our results are relatively robust for alternative revealed comparative advantage indicators.

This paper investigates farm technical efficiency (TE), taking into account technological heterogeneity among farms in the case of the Slovenian Farm Accountancy Data Network sample of farms in the 2007-2010 period. A random parameter model is used to analyse inter- and intra-sectoral heterogeneity of farms. The empirical results confirmed that it is important to handle both inter- and intra-sectoral heterogeneity. Additionally the estimations based on propensity score matching (PSM) demonstrated that farms in less favoured areas (LFAs) are slightly technically less efficient than farms in non-LFAs. However, combined PSM and difference in difference estimator cast serious doubts that LFA farms are less efficient in terms of TE. Both groups of farms are able to adopt technologies to natural and other conditions for their operation.

This paper analyses the efficiency of EU internal dairy markets between 2000 and 2014 from spatial price integration perspective, employing a cross-methodological approach in three steps. First, we analyse the spatial integration of raw milk markets, which is often used to test the efficiency of agricultural markets. National monthly raw milk price data are tested for integration and whether the Law of One Price (LOP) holds. Second, we assess integration results in a binary choice setting, employing gravity model variables. Finally, in order to partly overcome the often cited drawback of price transmission analysis (i.e. that by employing price variables (only), there is no connection with real trade flows), bidirectional network analysis models are designed using export variables. Country specific network centrality measures were contrasted with the frequency of LOP fulfilment. Results suggest that besides the milk volume traded, the position occupied in the trade network structure should be also considered when market integration is analysed.

The paper investigates determinants of quality upgrading in the European Union agri-food exports using panel data models in the 2000-2011 period. Employing highly disaggregated data we show that export unit value is positively associated with level of economic development and the size of population. Our results indicate negative impacts of comparative advantages and trade costs on export quality upgrading. Estimations confirm the important role of income distribution in quality specialization. The income inequality increases specialization in high quality varieties for rich countries. Results are robust to alternative subsamples including vertical specialized and final agri-food products.

The article investigates agri-food export competitiveness of 23 countries on global markets using revealed comparative advantage (B) index in the 2000-2011 periods. Results indicate that main global agri-food exporting countries have revealed comparative advantages. The panel unit root tests suggest convergence in the dynamics of the B indices. Mobility indices indicate relatively low mobility in the B indices at the product level. The Kaplan-Meier survival rates of the B indices on long-term are among the highest for the Netherlands, France, Belgium, the United States, Argentina and New Zealand. The level of economic development, the share of agricultural employment, subsidies to agriculture, and differentiated consumer agri-food products increases the likelihood of failure in comparative advantage, while agricultural land abundance and export diversification reduces.

The paper investigates the opinion of small- and medium size enterprises in agri-food chain on the role of trust in contractual relationships using a survey in Central Hungarian region. Contrary to our expectations, a relatively high share of respondents poses written contracts. Estimations show that there are no significant differences between various levels of agri-food chain regarding to existence of written contract. Our results suggest that asset specificity, firm size and frequency of partner change increase the probability of written contract. Trust in most important partner has ambiguous impact upon the existence of a formal contract. Trust in public legal enforcement and the efficiency of the legal system also play important roles on the existence of written contract. Sectorial specificity has positive and significant effects on the written contract.

There now exists a large literature on price transmission in agro-food sectors. However, a great majority of empirical studies focus on the existence of asymmetry and, by and large, do not allow investigating the reason for its presence or absence. This is in sharp contrast to the theoretical literature that provides a number of explanations for why we should expect (a)symmetry. In response to this, this paper tries to uncover the reasons for asymmetric price transmission in the agro-food chain. To do so, we use meta-analysis drawing on the existing studies from this area. Our focus is on the organizational and institutional characteristics of the agro-food supply chain. Our findings suggest that asymmetric price transmission in farm-retail relationship is more likely to occur in sectors/countries with more fragmented farm structure, higher governmental support and more restrictive regulations on price controls in retail sector. On the other hand, more restrictive regulations on entry barriers in retail sector and relative importance of the sector in question tend to promote symmetric farm-retail price transmission. The latter is also more likely in the presence of strong processing industry.

The aim of this paper is to examine the relationship between the factor endowment and the pattern of intra-industry trade. Our empirical analysis relates to Hungary’s intra-industry trade in agri-food products with 26 member states of the EU over the period 1999-2010. Estimations reject the comparative advantage explanation of vertical intra-industry trade and provide partial support the prediction of Flam and Helpman model. Findings highlight that nature of factor endowments play also important role in explanation of vertical intra-industry trade. Other variables like market size and distance confirm the theoretical expectations. In addition, trade with new member states positively, whilst the EU accession ambigouosly influence the share of vertical IIT.

Technological heterogeneity is an important issue in studies of agricultural production. We assume that this is much more serious in transition countries, since the agricultural sector in these countries is characterized by the presence of even more different technologies and structures. Previous studies address the issue of production heterogeneity in developed countries; however, there is a clear lack in the literature concerning the effect of different technologies in transition countries. There are two common approaches to estimate different technologies: the most common one is to split the sample into groups based on some a priori information; an alternative method is the latent class models. In the present paper both approaches are used to identify different technologies and to estimate technical efficiency. It seems to be that the LCM model identified better technological differences and separated better the effect of heterogeneity and technical efficiency.

The paper analyses small and medium firms’ perceptions on contract enforcement along food chain in central region of Hungary using survey data. We find that 59 per cent of respondents believe that they could use court to enforce contracts with their partner. However we do not find significant differences along food chain. Our estimations suggest that contractual specificity and firm attributes, external linkages, efficiency of legal systems factors, buyer and seller specific factors significantly influence the opinion on contract enforcement. Interestingly, the impact of branch specific characteristics has no impacts. Acceptance of financial loss can be explained by contractual specificity, external linkages, and efficiency of legal systems. Buyer, seller and industry characteristics has not played role in the explanation of financial losses.

Crop insurance products can improve and stabilize economic performance. However, due to insurance market imperfections, the use of insurance products often requires governmental support. This paper analyses the actual impact of insurance products on the economic performance of cropping farms by linking the economic performance model with the insurance demand model. For this analysis, a simultaneous equation system is solved. Our estimations show a negative impact of insurance on the economic performance indicators farm profit, labour productivity and land productivity. The analysis of the insurance demand side confirms financial limitations of many farms.

A szerződéses kapcsolatoknak egyre nagyobb jelentősége van a modern élelmiszer- gazdaságban. Az élelmiszer-gazdaság hatékony működéséhez szükséges, hogy a szerződő fe-lek betartsák szerződésben vállalt kötelességeiket. Az elméleti modellek különböző módon hangsúlyozzák a bíróságok szerepét a szerződések kikényszerítésében. A cikk a szerződések kikényszeríthetőségének problémáját vizsgálja a magyar élelmiszer-gazdaságban egy kérdőíves felmérés segítségével. Legfontosabb eredményeink a következők. A válaszadók egyöntetűen úgy vélték, hogy a szerződések bírósági úton történő kikényszerítése hosszú ideig tart és nagyon költséges. Ugyanakkor csak a cégek kis része fordult bírósághoz szerződések kikény-szerítésének a céljával. A beszállítók védelméről alkotott törvényt a cégek pozitívan fogadták, noha ennek hatékonyságáról megoszlik a véleményük. A termelő, a kisebb méretű és exportáló cégek nagyobb arányban jelezték a gazdasági válság negatív hatását, mint a feldolgozó, nagyméretű és hazai piacra termelő vállalatok. -------------------------------------------------- Contractual relationships play an increasingly important role in the modern food chain. The efficient working of the food chain requires the fulfilment of contracts between partners. Theoretical models emphasise different aspects of courts in contract enforcement. This article investigates the enforcement of contracts in the Hungarian food chain by means of a survey. Our main results are as follows. The majority of respondents believe that contract enforcement via the court is very time-consuming and costly. But a minority of firms goes to the court in order to enforce their contracts. Respondents evaluate positively the regulations, but they have some doubts about their efficiency. Producers and small exporter firms are more sensitive to the negative impact of the economic crisis than are large and domestic market oriented firms.

There now exists a large literature on price transmission in agro-food sectors. However, a great majority of empirical studies focus on the existence of asymmetry and, by and large, do not allow investigating the reason for its presence or absence. This is in sharp contrast to the theoretical literature that provides a number of explanations for why we should expect (a)symmetry. In response to this, this paper tries to uncover the reasons for price asymmetric transmission in the agro-food chain. To do so, we use meta-analysis drawing on the existing studies from this area. While there are some limitations to our data, we believe that this perspective could be very useful in advancing our understanding of price transmission mechanisms. Our findings suggest that asymmetric price transmission in farm-retail relationship is more likely to occur in sectors/countries with more fragmented farm structure and more restrictive regulations on price controls in retail sector. Instead, more restrictive regulations on entry barriers and operational conduct of retail trade tend to promote symmetric price transmission. The latter is also more likely in the presence of strong processing industry.

This paper explores the effect of exchange rate volatility and of the institutional quality on international trade flows of transition economies in Central European Countries by applying a gravity model of balance panel between 1999 and 2008. The results show that nominal exchange rate volatility has had a significant negative effect on trade by applying Psuedo- Maximum-Likelihood (PML) estimator method over this period. The institutional quality need to be improved in case of size of government and the quality of regulation. The negative effect of exchange rate volatility on agricultural exports suggests that joining Central European Countries to the euro zone can reduce the negative effects of exchange rate volatility on trade.