Measuring the Integration of Staple Food Markets in Sub-Saharan Africa: Heterogeneous Infrastructure and Cross Border Trade in the East African Community

Abstract

This analysis employs cointegration methods and semiparametric regression in order to assess the integration of maize markets and the factors determining national and cross-national transmission of price signals in Sub-Saharan Africa. We use a rich dataset of 16 series of wholesale maize prices between 2000 and 2008 for Kenya, Tanzanian and Uganda. Distance is shown to have a significant nonlinear impact on the transmission of information - modelled using a semi-parametric partially linear model. Border effects are found to be heterogeneous. The empirical results provide strong evidence that the Tanzanian market is isolated from the rest of East Africa and internally fragmented.

Keywords: border effect, spatial market integration, cointegration, semi-parametric regression, partially linear model, Eastern Africa, maize

JEL Classification: C320, Q110, Q130, Q170, Q180