Export diversification and Export incomes Fluctuation in Agricultural Sector: Application of Panel-VECM in Developed Countries

Subject Areas : Agricultural Economics Research

elham sadeghi ¹ , Reza Moghaddasi ² , safdar hoseini ³ , Amir Mohammadi Nejad ⁴

1 - دانشگاه آزاد اسلامی واحد علوم و تحقیقات تهران
2 - Islamic Azad University
3 - Professor at the University of Tehran
4 - Agricultural economics, Islamic Azad university

Received: 2020-06-17 Accepted : 2023-03-08 Published : 2023-02-20

Keywords: Herfindahl index, Love Index, Export incomes fluctuation, Export diversitfication,

Abstract :

Export diversification is one of the economic growth main components. Also, accepting the agricultural sector importance in the current economy, attention to export diversification in this sector is necessary. This study examines the factors affecting export incomes fluctuation in the agricultural sector. The main purpose is this question whether there is a direct relationship between the agricultural exports diversification and the export incomes stability in this sector. The instability of agricultural export incomes was calculated using the Love Index and the exports diversification was calculated using the Herfindahl Index. The panel vector error correction model and fully modified least squares method has been used to estimate the relationship between variables in 20 developed countries over the period 2004-2018.The findings of this study show the concentration of exports, the instability of GDP, the instability of the real exchange rate, the instability of the inflation rate are positively related to the export incomes fluctuation in of this sector. These findings suggest that countries need to diversify their agricultural exports and develop economic cooperation with other countries.

References:

1. Zare Mehrjerdi M, Azizi A, Korooni Z. Factors Affecting Pistachio Export Earnings Instability and its Effect on Agricultural Exports. International Journal of Agricultural Management and Development (IJAMAD). 2016;   6(3):281-289. [DOI: 10.22004/ag.econ.262571]

2. Coppock D. International Trade Instability. The Economic Journal. 1978; 8: 602-604.


3. Knudsen O, Parnes Trade Instability and Economic Development. Lexington Books. 1975.  Lexington


4. Guillamont P, Guillamont J.S, Burunf J. How Instability Lowers African Growth. Journal of African Economies. 1997; 8: 87-107. [DOI: 10.1093/jae/8.1.87]


5. Myrdal Une Economie Internationale. 1958. Paris, PUF. [DOI: 10.2307/3498329]


6. KeynesM. The Policy of Government Storage of Foodstuffs and Raw Materials. Economic Journal. 1938. 48:449-460. [DOI: 10.2307/2225437]


7. Hirschman O. The Strategy of Economic Development. Yale University Press. 1958. New Haven. [DOI: 10.2307/1235188]


8. Friedman The Reduction of Fluctuations in the Incomes of Primary Producers: A

Critical Comment, Economic Journal. 1954; 64: 698-703.

9. MassellF. Export Instability and Economic Structure. American Economic Review. 1970; 60: 618-630. [DOI: 10.1016/0304-3878(83)90030-5]


10. Naya Fluctuation in Export Earning and Economic pattern of Asian Countries. Economic Development and Cultural change. 1973; 21: 629-641. [ DOI:10.1086/450666]


11. Love Export Instability in Less Develop Countries: Consequences and Causes. The Journal of Economic Studies. 1987; 14(2): 3-80.

1. El-Samhouri M. Flexible Exchange Rate and Export Instability: The Impact of the Post-1973 International Monetary System on the Developing Countries, The Journal of Developing Areas. 1994; 28: 503-520.


2. Tariq A, Najeeb Q. Export Earning Instability in Pakistan. The Pakistan Development Review. 1995; 34: 1181-1189.


3. Hejbar Kiani K, Nik Iqbal S. Study of Exchange Rate Disequilibrium Effect on Export Supply of Agricultural Products. Economic Research.2000; 35(1):39-53.


4. Wasim M.P. Export instability and concentration in the less developed countries. Journal of Developed Economics. 2003 ;  4:279-297


5. Bilquess F, Mukhtar T. Export instability, income terms of trade instability and growth: The case of India. Romanian Economic Journal. 2011; 39:25-44.


6. Fakhraei A, Ahmadi H. Study of factors affecting the fluctuations of Iran's non-oil export foreign exchange earnings. Quantitative Economics. 2018; 2:123-149. [DOI: 10.22055/jqe.2011.10603]


7. Sivarajah P. Instability in agricultural exports- determinants of instability of Sri lankan tea exports.  International Journal of Advanced Research and Review. 2017. 2(6):34-43


8. Salari Bardseri M, Khalilian S, Mousavi  H. Study of factors affecting the trade of agricultural products with emphasis on oil incomes. Agricultural Economics Research. 2017. 9(3):33-56. [DOI: 20.1001.1.20086407.1396.9.35.3.2]

20. Nazemi Investigating the effect of macroeconomic variables on non-oil exports. Industrial Management. 2009; 4(10):105-117. [DOI:10.30495.2021.21238.2011]


21. Johansen S, Juselius K. Testing Structural Hypothesis in a Multivariate Cointegration Analysis of the (PPP) and the (UIP) for (UK). Journal of Econometrics. 1992; 53: 211-244. [DOI:10.1016/0304-4076(92)90086-7]


22. Engle R.F, Granger C.W.J. Cointegration and error correction: representation, estimation and testing. Econometrica. 1987; 55(2): 251-276. [DOI:10.2307/1913236]


23. Noferesti, M. Unified and collective roots in econometrics. Rasa Press. Tehran.


24. Pedroni Panel cointegration: asymptotic and finite sample properties of pooled time series tests with an application to the PPP hypothesis. Econometric Theory, 2004; 20: 597–625. [DOI:10.1017.0266466604203073]


25. Gujarati N. Basic econometrics. United States Military Academy.1995. New York.


26. Tegene Commodity Concentration and Export Earning Instability: Evidence from African Countries. The American Economist. 2000; 34: 61-73.