Chapter 6 - Impact of Market Access on Food Security—Application of Factor Analysis

Abstract

Governmental policies that help to liberalize food markets by abolishing state-owned stores are expected to encourage private traders to increase the market access to food. However, due to poor infrastructure and lack of market information, the entry of private traders in food markets remains less than expected. The impact of such policies on food security of the households is the theme of this chapter. This chapter uses case studies on market reform and private trade in Eastern and Southern Africa, India, MENA and transaction costs and agricultural productivity in Madagascar to determine the impact on measures of household welfare. We also examine the presence of food deserts in the US. This chapter uses factor analysis technique to derive factor scores from a subset of highly correlated market related variables, to test hypotheses about the relationship between food security and market access. Factor analysis technique is demonstrated using the principal component method in STATA, to compute the observed correlation matrix, estimate the factors, interpret factors using rotation procedure, compute factor scores for analysis.