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  • Author: Simeon Kaitibie x
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Abstract

This analysis of food imports used an enhanced gravity model of trade, with food imports from approximately 136 countries from 2004 to 2014. Using improved panel data techniques, we show that total income, inflation in the food exporting country, corruption perception in the food exporting country, trade openness in the food exporting economy, GCC membership are important determinants of food imports by Qatar. In addition, we show that Qatari food imports mostly originate in countries with, on average, similar economic sizes. Finally, Qatar’s factor endowment is dissimilar to those of most of its trading partners, a situation that potentially fosters international food trade in accordance with the Heckscher–Ohlin theory of trade.

Abstract

Using Qatar as a case study, we exploit a novel micro-data set for 102 raw agricultural imported commodities on a shipment-by-shipment basis over the period January 1, 2005 to June 30, 2010. The data comprise over half a million individual observations, with a very rich set of characteristic specifications. Several interesting initial results emerge from the analysis. First, we find evidence of import-price volatility far in excess of world price volatility across a wide spectrum of commodities. Second, supply origins for virtually all commodities are highly concentrated. In many cases, commodities are sole sourced. Third, although less so, concentration is evidenced among Qatari importing companies for certain commodities. Fourth, we notice anomalies that lead to inefficient shipping methodologies and associated increased costs. The paper concludes by providing an empirical illustration of hedonic price modeling for barley followed by guidance for future empirical research.

Abstract

Import-dependent arid Arab micro-states such as those in the Persian Gulf are particularly vulnerable to food-security risk. Among the many remedial policy suggestions, some initiation or increase in domestic production is to insulate these countries from supply disruption, import price volatility, and high import prices. This article does not address the efficacy of domestic production but notes that such production will require government intervention in the form of production subsidies to mitigate market risk. The narrow focus of this article is to provide a conceptual structure of subsidies that avoids many previous problems in established subsidy systems. The model has two components: a calculation of the true economic cost of a unit of an agricultural product and a deficit payment that is calculated to bridge the gap between true economic cost and market remuneration. The structure of the deficit payment is crucial to the establishment of a beneficial incentive system but the article is limited to a few of many possible options. The deficit-payment option we suggest makes the most use of market signals, avoids perverse incentives, and provides a structure to encourage efficiency, quality enhancement, and product differentiation in agricultural products. The system is designed to be WTO compliant. A detailed numerical example is used for the economic price and simple analytics, and numeric examples are used to illustrate the incentive effects of deficit payments.