Latin American Agri-Food Exports, 1994–2019: A Gravity Model Approach

Abstract

This study analyses the causes of the strong growth in the agri-food exports of Latin America between 1994 and 2019. To do this, a series of gravity models are estimated, using as a dependent variable the agri-food exports of 15 Latin American countries to their 185 principal trading partners. The empirical specification is based on the gravity theory of trade, according to which, trade between two countries is determined by the size of both of their markets and their transport costs. Other variables have also been included, considering the theoretical foundations proposed for the gravity model. We initially used the PPML estimator since it is the method that provides estimates with the best properties. We later compared these results with those obtained through OLS and the Heckman selection model. Our findings show that the growth in agri-food exports is explained by factors of both supply and demand, but that the latter plays a more important role since we have obtained evidence of a reverse home-market effect. Furthermore, we can conclude that the creation of regional trade agreements, such as NAFTA, MERCOSUR, CACM, APEC, and TPP, has significantly favoured agri-food exports in the region.

Globalization versus Regionalization in Agri-Food Exports from Spain and Portugal

“…When studying the dynamics of qualitative, sectoral, and spatial diversification of agri-food exports, it is essential to consider the effects of regional economic integration processes. Various studies identify a process of trade expansion supported by the development of an internal market shared by trading partners, which is especially significant for processed agricultural products and those with high added value [17][18][19]. Several studies have addressed this topic with a specific focus on the EU, considering different periods and various goods.…”

“…This study aims to complement the findings of previous research analyzing the effects of economic integration processes on the trade flows of agri-food products [17][18][19], particularly in the EU [20][21][22][23][24][25][26][27][28][29]. To that end, it explores whether the consolidation of the European agricultural market reinforces the geographical concentration of exports to member state trading partners or, conversely, if a process of spatial diversification takes place.…”

Agriculture's globalization: Endowments, technologies, tastes and policies

“…During that time, the value of global agricultural trade has increased from just over US$430 billion in 2000 to almost $1500 billion by 2019. Latin America's increasing export prominence is clear (compare Serrano & Pinilla, 2016with Ayuda et al, 2022, as is that of Southeast Asia. Sub-Saharan Africa, by contrast, has remained a slight net importer of farm products.…”

“…However, the deeper the integration agreement the less likely others will join (Maggi & Ossa, 2021). Historically, PTAs have delivered few cuts to agricultural subsidies and tariffs in addition to diverting trade against outsiders (Bureau et al, 2019), although see Ayuda et al (2022), Jayasinghe andSarker (2008), andSkripnitchenko et al (2006).…”

Consumer Behaviour and Attitude towards the Purchase of Organic Products in Riobamba, Ecuador

“…The commercialization of organic products in Ecuador has a certification system that responds to the sociocultural and economic reality of the localities. The farmers commercialize their products in the markets and free fairs, since they can have direct communication with the consumers and can therefore establish trust relationships [ 29 , 30 ] and it allows coordination of purchase and sale between the producers and consumers [ 31 ]. This production and commercialization system is based mainly on the access and consumption of healthy products, where the harmful effects of these foods are very low to ensure a healthy diet for the population [ 32 , 33 ].…”