Food Prices, Road Infrastructure, and Market Integration in Central and Eastern Africa
2014
Portugal-Perez, Alberto | Brenton, Paul | Regolo, Julie
Market integration is key to ensuring sufficient and stable food supplies. This paper assesses the impediments to market integration in Central and Eastern Africa for three food staples: maize, rice, and sorghum. The paper uses a large database on monthly consumer prices for 150 towns in 13 African countries and detailed data on the length and quality of roads linking the towns. The analysis finds a substantial effect of distance and share of paved road on the level of market integration, as measured by relative prices. Furthermore, the paper evaluates the additional domestic and cross-border impediments to market integration in the region and represents them on a regional map. The analysis finds heterogeneous levels of domestic market integration across countries and significant "border effects" for the majority of contiguous countries in the sample, which reveal that markets are more integrated within than between countries. Countries that are members of the same regional trade agreement have substantially "thinner" borders with other members. Finally, the analysis shows that countries with less integrated domestic markets and "thicker" borders with their neighbors also have a higher prevalence of food insufficiency. These findings support policy efforts in tackling domestic and border impediments to transactions such as reforming customs, simplifying nontariff measures, addressing corruption, improving the quality of roads, and deepening regional trade agreements.
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