International Market Integration Research Articles

Globalization, welfare, and inequality: Evidence from transoceanic market integration, 1815–1913

Abstract This article contributes to the growing historical literature on the ‘first globalization’ (1815–1913) and income inequality in countries that exported agricultural products. International market integration is expected to increase the demand for exports and therefore their prices. We estimate the effects of increased prices from international market integration on national welfare and income inequality between and within regions in three major exporters of agricultural products—British India, Colonial Indonesia, and the United States—using the prices of eleven key primary commodities. Market integration significantly increased aggregate welfare, but the gains were unevenly distributed. Producing regions gained up to nearly 6% of their GDP. Since the regions that made most welfare gains were also the poorest in their countries, market integration mitigated inequality between regions. Within the southern United States and Java, plantation owners obtained most gains, causing a substantial increase in inequality between persons.

Economic Sustainability of the Milk and Dairy Supply Chain: Evidence from Serbia

The sector of milk and dairy products in Serbia along the entire supply chain has been under significant challenges in recent years, especially in current crises. In this direction, this research looked at the supply chain of milk and dairy products by analyzing the primary production, the situation in the processing industry, and the international market’s competitiveness. Indicators of technical efficiency were used to analyze the situation on agricultural farms, while for the processing industry, the impact of various variables on profitability was evaluated using panel models. Furthermore, an examination of these products’ standings in the global market was conducted by assessing their revealed comparative advantages and integration index. The results of the research determined the level of technical efficiency of the producer, while the statistically significant influence of certain variables on profitability was determined within the processing industry. Additionally, the analysis showed modestly revealed comparative advantages in the international market but good integration with the international market. Finally, the sustainability of the milk and dairy products supply chain is highly questionable in crises, which will be a challenge for producers and policymakers.

Trade sanctions and international market integration: Evidence from the sanctions on Iranian methanol exports

AbstractThis paper examines the impact of trade sanctions, imposed against large exporting nations, on the degree of spatial integration achieved between non‐sanctioned importing markets. The analysis is conducted under a parity bounds framework based on Negassa and Myers (American Journal of Agricultural Economics, 89, 2007, 338). We apply this model to investigate the effects of the 2012–2016 sanctions against Iran's petrochemical exports on the main importing markets in Asia and we use it to measure the degrees of spatial integration attained outside and during the sanction period. Our findings document a complete reconfiguration of the spatial extent of the methanol markets. Outside of the sanction period, a high degree of market integration was achieved among the main Asian markets. In contrast, we observe the emergence of two little integrated market areas, China and India on one side and South Korea and South‐East Asia on the other, when sanctions are imposed.

IFRS convergence and international trade: evidence from China

Using a comprehensive dataset of firm-level export transactions from China Customs, this paper investigates whether mandatory International Financial Reporting Standards (IFRS) convergence promotes Chinese firms’ export activities. We find that compared with private firms which were not immediately required to comply with the new accounting standards in 2007, listed firms experienced a significant increase in their exports after converging with IFRS. The positive effect of IFRS convergence on exports only occurred when firms traded with IFRS countries and when they were non-state-owned enterprises. The findings are robust to a battery of sensitivity tests. We contribute to the literature on the real economic effects of IFRS harmonisation by documenting its role in enhancing international trade and global product market integration.

The role of global agricultural market integration in multiregional economic modeling: Using hindcast experiments to validate an Armington model

The representations of international trade and global market integration play central roles in long-term global agricultural economic modeling. However, the conventional use of the gravity models (i.e., the Armington approach) of trade may not adequately account for the dynamic process of market integration. In this paper, we generalize a logit-based Armington approach by permitting home preference bias erosion to account for a trend of global market integration. We build a simple agricultural economic equilibrium model and conduct hindcast experiments to examine the historical trend of market integration. The results show a significant integrating trend of the global agricultural market implied by converging Armington preference distributions (i.e., home bias erosion) in 1995–2015. We demonstrate important implications of allowing the dynamic trend of market integration implied by bias erosion on estimating trade elasticities. By testing the future market integration trend implied by historical home bias integration in the Global Change Analysis Model (GCAM), we show a high sensitivity of long-term agroeconomic projections to future trade and market integration scenarios.

Travel Bubble Policy Supporting between Thailand and Laos: Evidence from Tourist Market Integration Testing

This paper examines international tourist market integration for international tourists from China, Japan, Malaysia, Korea and USA visiting Thailand and Laos for supporting the travel bubble policy. These are being integrated to be offered as a single destination, using quarterly data from 2001 to 2019. The cointegration test of the ARDL approach assesses the number of international tourists. The results of the research show that the tourism markets of Thailand and Laos are integrated. In the short run, international tourists from China and Malaysia who visit Laos also visit Thailand. Bi-directional causality was evident for tourists from Japan, Korea and the USA. For long run causality, tourists from Japan, Malaysia, Korea and the USA who visit Laos also visit Thailand. Therefore, we can confirm that both Thailand and Laos follow the single destination policy and both countries are complementary tourism destinations for international tourists. Therefore, this study confirms that Thailand and Laos can be launch the travel bubble policy. The Thailand and Laos governments should target tourism markets by travel bubble policy with special protocols that is designed to improve competitiveness or to enhance tourism market efficiency.

Do protectionist trade policies integrate domestic markets? Evidence from the Canada-U.S. softwood lumber dispute

We consider the effects of protectionist trade policies on international and domestic market integration, using evidence from the long-standing softwood lumber trade dispute between Canada and the United States. The benefits of trade liberalization are widely acknowledged, including better domestic-to-foreign price transmission due to reduced tariffs and lower trade costs between countries. Yet in recent years we see efforts to protect specific domestic groups, including producers, through a revival of protectionist trade policies. Such policies could improve the domestic price transmission across domestic markets as consumers may seek lower-cost alternatives domestically. We investigate these ideas using a bi-variate three-regime threshold vector error-correction model to examine the spatial price transmission between Canadian and U.S. markets and within U.S. domestic markets. We do that by introducing a structural break at the start of an effective free trade period within our sample. The results suggest that duty-free treatment for imported Canadian softwood lumber substantially lowers the transaction costs between the two nations. Prices are more easily transmitted from the Canadian market to the U.S. at a higher speed, but the speed of price transmission in the reverse direction is not statistically significant. The U.S. domestic market experienced a higher speed of price adjustment across domestic regions prior to the free trade period, which provides evidence that protectionist policies lead to better domestic market integration.

International Market Integration and Competitiveness of Indian Sugar

Globalization and liberalization policies facilitated national and international commodity markets to integrate with each other. This integration facilitated price transmission and market efficiency of commodities at domestic markets, leading traders across the globe to exploit opportunities. India is one of the vibrant and emerging economies in the world absorbing these economic features and integrating its markets with the world. This article, focusing on the Indian sugar market, explores market integration of sugar prices with the US, UK and global average prices and also contributes a policy dimension to enhance the competitiveness of the Indian sugar sector. The article, using Johansen’s co-integration with a vector error correction model (VECM), finds the existence of market integration of Indian sugar prices with international prices. However, the average Indian sugar prices are higher than those in other markets, with the support of government price protection policies. These higher prices motivated to increase sugar production in the country. The lower cane prices of Brazil, Australia and Thailand pose challenges in international markets for Indian sugar. Despite this, the Indian sugar sector has a competitive advantage in becoming a great energy source by focusing on ethanol production, which would lead to reducing its international dependency for oil supplies. In addition, the sector can also contribute to rural socio-economic development through adopting technology to produce other by-products rather than merely concentrating on sugar.

Interactions through Soft Law in the EU Multi-level Space – the Cases of Competition Enforcement and Telecommunications Regulation

The evolution of EU administrative law generates peculiar governance processes in the entire EU policy space, EU Economic Law being a prime example. By comparatively examining the interactions of the key national and supranational institutions enforcing EU competition law and telecommunications regulation, this paper argues that the Commission is making strategic use of particular governance tools (soft law instruments and good governance principles) to obtain enforcement outcomes that further its own vision for steering EU Economic Regulation. Furthermore, the success of this approach seems to be related to the institutional design of the policy field, which the Commission wants to dominate. In particular, a field where the Commission has exclusive regulatory competence (competition) lends itself to steering through soft law. Conversely, steering through soft means in domains where the Commission is weaker by design (telecommunications) seem to fail. In the latter case, to achieve a position of power, the Commission is likely to exert pressure on the Council to adopt hard law at EU level – a development we currently observe with the December 2020 Commission proposal for a Digital Markets Act. Overall, the Commission, as the umpire of internal market integration, strategically uses soft law to secure a position of dominance in the domain of EU Economic Regulation.

북미 LNG 수출이 국제 천연가스 현물시장 間 가격 형성에 미친 영향 연구

북미 LNG 수출이 국제 천연가스 현물시장 間 가격 형성에 미친 영향 연구

The effects of market integration during the first globalization: a multi-market approach

AbstractThis paper is a first attempt to measure the effects of international market integration on world trade and welfare in the ``long nineteenth century”. We run a multi-market partial equilibrium model, which takes into account the interactions between route-specific changes in trade costs, for the two most traded commodities, cotton and wheat. The collapse in trade costs accounted for 60 percent of the growth of trade for cotton and for 40 percent for wheat. As expected, welfare gains were larger for small open economies, but they were substantial also for large countries, with big differences determined by trade policies.

Swing Suppliers and International Natural Gas Market Integration

This study explores the international natural gas market integration using the Engle–Granger cointegration and error correction model. Previous studies have suggested that liquefied natural gas (LNG) and oil-linked pricing with a long-term contract have played key roles in gas market integration, especially between European and Asian markets. There is, however, little discussion of the role of the emergence of a swing supplier. A swing supplier, e.g., Qatar or Russia, is flexible to unexpected changes in supply and demand in both European and Asian markets and adapts the gas production/exports swiftly to meet the changes in the markets. Qatar has been a swing supplier since 2005 in the global natural gas market. In 2009, Qatar’s global LNG export share reached above 30% and has remained around 25% since then. Empirical results indirectly support that the emergence of a swing supplier may tighten market integration between Europe and Asia. The swing supplier may have accelerated the degree of market integration as well, particularly after 2009.

Price gaps at the border: Evidence from multi-country household scanner data

Studies employing micro price data to examine the extent of international goods market integration tend to find that borders imply arbitrage-impeding transaction costs, inducing market segmentation. Within monetary unions, these effects are found to be very minor though, at least when online prices are considered. However, analyzing household scanner price data from three euro area member states, Belgium, Germany and the Netherlands, we document that households face (and pay) significantly different prices for identical goods across these countries in the vast majority (around 75%) of cases considered. For regions within countries, as a counterfactual, however, no evidence for such effects exists. Employing cross-border shopping information, we are able to draw direct conclusions about the question of integration of markets for a substantial number of goods. In addition, we can also derive a measure of border costs for most of them. For goods, for which no cross-border shopping take place, we provide a lower bound for border costs in the majority of cases. In line with existing evidence, our findings suggest considerable heterogeneities in border costs. Median values generally range between 15% and 20% (of the price of a good) for exact border cost estimates and between 18% and 20% for the derived lower bounds. Considering the distribution of values obtained suggests that most values lie in a range of ±40%. Since our data set comprises purchase information from all major retailers present in a given market, we are also able to examine the role of retailer heterogeneity for cross-border price gap estimates. Differences in retailer composition turn out to be fairly small, however. Grouping goods by various characteristics reveals that goods purchased more often tend to exhibit somewhat bigger border estimates. Considering the price or the goods category, however, does not yield any conclusive insights.

International Market Integration: A Survey

AbstractMarket integration is a canonical topic in international finance. The question of whether and to what extent markets are integrated with the global economy has motivated one of the largest literatures in this field. Given this vast body of research, this survey shall only focus on the theoretical and empirical studies on one aspect of market integration – equity market integration. It reviews the evolution of various approaches employed in studying market integration. This survey discusses the recent empirical findings on cross‐sectional and time‐series dynamics of integration across developed and emerging markets. It also describes the empirical estimation of three current measures of market integration and discusses their usefulness as well as limitations. Finally, the survey provides a few future directions for this line of research.

Integration in European coal markets, 1833–1913†

AbstractThis article analyses coal market integration in Europe over the long nineteenth century. The market integration of coal, a key commodity associated with the industrial revolution, is an aspect of European economic history that has received little attention. The literature on the evolution of markets has concentrated on agricultural products, mostly cereals. This article examines intra‐ and international market integration in the principal coal‐producing countries, Britain, Germany, France, and Belgium; and adds three main consuming southern European countries to the analysis of the international market. It provides new evidence on prices, as well as trade, and uses a straightforward approach to address coal price behaviour. Despite shocks, clear trends toward integration in both domestic and international markets can be observed, even if by one of our measures the latter started at a later date. Processes of market integration, however, seemed to slow from the end of the nineteenth century. Explanations are offered as to the causes of the extent and timing of integrations: reductions, mainly, in transportation costs, but also in information costs, and, in the international market, protectionism. The influence of cartels, on the other hand, may have been limited, particularly in the international market.

A global look into stock market comovements

By investigating the developments and determinants of the dependence of domestic stock returns on latent global factors for 37 advanced and emerging countries during 1996–2015, this article illuminates contemporary trends in international finance with implications to the potential gains from international portfolio diversification and the independent effect of domestic monetary policy. There were upward time-trends in the dependences in the majority of the countries and at a global level, suggesting steady advances of international stock market integration or gradual declines of the potential gains from diversifying a stock portfolio internationally. The integration was greater in advanced countries than in emerging ones while progressing more rapidly in emerging countries than in advanced ones, suggesting relative attractiveness of emerging markets as an investment destination. An indication of a global financial cycle is that the degree of the dependences for different country groups changed over time in a similar fashion. Differences in those dependences across the countries and those over time were explained by the openness of international trade, the size of domestic stock market, and policies of monetary authorities: the level of short-term interest rates, the openness of the capital account, and the variability of foreign exchange rates. In that cycle, there emerged a dilemma between the mobility of international portfolio stock investments and the independent effect of domestic interest-rate policy over not only the sample period but also in the run-up to the 2008 crisis, as far as nominal short-term interest-rate differentials with respect to the United States were concerned.

China and international market integration: Evidence from the law of one price in the Middle East and Africa

We model market integration in the Middle East and Africa by analyzing price dispersion and testing the law of one price (LOP) on highly-comparable actual local retail prices of 135 goods and services across 23 countries in the region over the period of 1990–2016. Second-generation panel estimators are applied to four price benchmarks: Regional average, South Africa, China, and US prices. Cross-regional price dispersion diminishes considerably over time up to 2008, particularly for non-tradeables around China price. The test of LOP indicates the percentage of convergent prices is highest in China price benchmark, followed by US, South Africa, and regional average benchmarks. Direct estimation of the convergence speed confirms this order. Overall, the results show evidence of increasing market integration in Middle East and Africa but it appears to be driven by global forces and, especially, the rise of China as a new economic power. The results show that some emerging market economies, such as China, can step up and promote integration while traditional economic powerhouses, such as the USA and UK, disengage from international economic relations.

Agricultural change and resilience: Agricultural policy, climate trends and market integration in the Mexican maize system

Abstract Ensuring that national food systems have capacity to withstand volatility and shocks is a growing concern. Given the complex processes involved, multi-scalar, multi-stressor analyses of critical food systems are needed. This paper presents a multi-scalar analysis of the Mexican maize system to provide insight into the sector’s evolution. The literature suggests that, over the last 30 years, climate trends, domestic and international market dynamics, and domestic policy changes have affected Mexico’s maize sector. In contrast, this study finds no conclusive evidence of wide-spread abandonment of maize. In addition, while economic globalization and climatic changes are often presented as the primary drivers of change in Mexico’s maize sector, results of this study show that domestic policy has been equally, if not more, influential in the sector’s evolution. More than international market integration, the relatively recent geographic concentration of commercial supplies within Mexico has increased national sensitivity to idiosyncratic shocks affecting the dominant supply region. In this light, smallholder persistence across Mexico may represent an underutilized strategic asset in policy efforts to enhance both domestic food security and national-level resilience. The Mexican case illustrates the potential role for proactive domestic policy in shaping sensitivities in the national food system to both internal and exogenous shocks.

INTEGRASI PASAR BERAS INDONESIA DENGAN PASAR BERAS INTERNASIONAL

The food crisis that was triggered by climate change has swept the world lately. Climate change is affecting the pattern of the world that led to changes in the pattern of agricultural production as well. Changes in the pattern of production results in world food production schedule was delayed, and along with these changes, many countries export so that world food prices increase. Rising world food prices starting from US and then spread in the other parts of the world, including Indonesia. However, it is unknown how big relatedness of International food prices changes with food prices in Indonesia. This paper aims to analyze the connectedness between domestic rice market with international market, how long shock in international rice impact on the domestic market and to analyze interlinkage in domestic primary rice market. Using data rice price in indonesia and international rice price of FAO, writer found that market rice integrated both in domestic and foreign, so the fluctuations in both markets would affect each other Keywords: Food Crisis, Production Pattern, Domestic and International Market Integration

INTEGRASI PASAR BERAS INDONESIA DENGAN PASAR BERAS INTERNASIONAL

The food crisis that was triggered by climate change has swept the world lately. Climate change is affecting the pattern of the world that led to changes in the pattern of agricultural production as well. Changes in the pattern of production results in world food production schedule was delayed, and along with these changes, many countries export so that world food prices increase. Rising world food prices starting from US and then spread in the other parts of the world, including Indonesia. However, it is unknown how big relatedness of International food prices changes with food prices in Indonesia. This paper aims to analyze the connectedness between domestic rice market with international market, how long shock in international rice impact on the domestic market and to analyze interlinkage in domestic primary rice market. Using data rice price in indonesia and international rice price of FAO, writer found that market rice integrated both in domestic and foreign, so the fluctuations in both markets would affect each other Keywords: Food Crisis, Production Pattern, Domestic and International Market Integration