Abstract
The vegetable sector plays an important role in ensuring food security. Vegetable trade flows in Romania have become a major concern due to constant trade balance deficits despite the country’s agricultural potential. Taking into account the paradox between what could be considered an abundance of factor endowments and poor trade balance results, the objective of this research was to study the linkage between vegetable trade flows and chain competitiveness. Spatial panel econometric methods were used to study the impact of the international vegetable market on the demand in Romania, while the Balassa index and Porter’s diamond modelling techniques were used to study the competitiveness of the vegetable chain at both county and national levels. By applying the spatial regression method to the international trade and national production panel data, it was found that an increase in the quantity of vegetables imported into Romania would cause an even greater decrease in national vegetable production. The results show that Romanian vegetable production is highly and negatively influenced by the growing appetite for imports—therefore leading to a national dependence on the global vegetable chain. Porter’s diamond model results confirm that: (a) growing vegetables is profitable in Romania and the average profit margin is higher in this economic sector than in many others; (b) there is a lack of competitiveness caused by the post-communist excessively fragmented agrarian land structure and poor performance of the irrigation, warehousing, and transportation sectors; (c) the national production of vegetables is generally self-sufficient with the exception of three counties that resort to importing and account for more than 70% of Romania’s total vegetable imports; (d) factor endowments cannot be fully harnessed, and this contributes to the deepening of the trade balance deficits. Improvement is possible by fostering competitiveness through increasing the performance of supporting industries and the logistics infrastructure, as well as removing market access barriers for the many small farmers.
Highlights
Vegetable consumption is continuously increasing in the EU, while the production of vegetables in Romania has been decreasing [1]
With respect to the structure of the trade balance deficit in Romania in 2020 in the case of the 24 agri-food product categories as dettferiarnidzeeeddbaibnlyanathcdeeedfiCecifiotmcoiftb3fio9nr1e,a0dg5r9Ni-thfooomoudseanpncrdoladEtuUucrRtes,.t[hW9e4ift]oh,uFrretishgp-umerceotst1toimwthpaeossrtteraulnactbtsuoorruearotcefedtohfweRtiortmahdaetnhbieaa’lsa- im of shaonwceindgefitchiteinmRoosmt aanffieacitne2d02a0girni-tfhoeocdascehoafinthsei2n4 tahgeri-ffaocoed opfrondautciot cnaatlegmoraireks eats ddeefimnaednd and cuirnrethnet CporomdbuincteidonNocomnednictliaotnusre
The fact that the spatial panel regression model is valid confirms that vegetable imports and national production are structurally correlated at the level of the 42 Romanian counties
Summary
Vegetable consumption is continuously increasing in the EU, while the production of vegetables in Romania has been decreasing [1]. The agricultural sector makes a significant contribution to the Romanian economy, especially when considering its share in the national gross domestic product. This industry plays a key role in Romania’s international trade and acts as one of the pillars in ensuring food security nationally, as well as in the EU and other countries. Even though Romania’s cereal production is significant when compared to other players in the global market, the export of raw materials is offset by the growing import of processed foods which have led to a steady increase in Romania’s trade deficit for agri-food products
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