The relationships of trade, economic growth, and market power: the case of rice exporting

This paper aims to analyse the relationship between rice exports and economic growth for the world&rsquo;s top four exporting countries (Thailand, Vietnam, India, and the United States). It also seeks to determine to what extent economic growth impacts a country&rsquo;s rice exports as well as to what extent foreign direct investment (FDI) impacts a country&rsquo;s ability to export rice. The analysis also examines the impact of market power on economic growth. <br /><br />The paper notes that the world rice market continues to be regarded as distorted, thin and volatile. These characteristics influenced domestic price and production policies in a number of Asian countries and large exporting countries. The paper reveals that export rice price is positively related to oil price, exporting wheat price, and transportation cost. The paper also finds that the rice exports of Thailand, Vietnam, and India contribute positively to economic growth. Moreover, the results indicate positive effects between human capital and economic growth within rice exporting countries.<br /><br />The paper confirms that selling power exists in the world rice market. And in summary, the main findings are as follows:<br /> for a 1% change in rice export price, total rice export volume increases less than 1% for a 1% change in exporting countries&rsquo; total production, rice export volume increases by more than 1% total increasing of market concentration on rice export can increase rice export price the increasing of exchange rate of exporting countries will increase the export price and volume increasing harvested area within exporting countries decrease rice export price there is a bidirectional causality between the international rice trade and economic growth for major rice exporting countries the economic growth of exporting countries affect the increase of market power. Thailand, Vietnam, and India have especially strong positive relationships between market power and economic growth the economic growth rates of Thailand, India, and Vietnam have relatively high impacts on market concentration there are also positive effects of economic growth on trade within the world rice market FDI and rice exports together contribute towards advancing economic growth in Thailand, Vietnam, and India. However, FDI by itself does not have a great effect on market power wheat and rice are substitutable goods but insensitively so in terms of substitute effects