Imre Ferto

Revealed Comparative Advantage and Competitiveness in Hungarian Agri-Food Sectors

This paper investigates the competitiveness of Hungarian agriculture in relation to that of the EU employing four indices of revealed comparative advantage, for the period 1992 to 1998. Consistency tests implies that the indices are less satisfactory as cardinal measures, but are useful in identifying whether or not Hungary has a comparative advantage in a particular product group. The results suggest that despite of significant changes in Hungarian agriculture during the 1990s, the pattern of revealed comparative advantage has remained fairly stable. RCA indices, despite their limitations, provide a useful guide to underlying comparative advantage and offer a further insight into the competitiveness of Hungarian agri-food sectors and the implications for trade when membership of the EU becomes a reality.

Intra-Industry Trade in Horizontally and Vertically Differentiated Agri-food Products Between Hungary and the EU

Intra-industry trade in agri-food products between Hungary and the EU is shown to be low and dominated by vertically rather than horizontally differentiated products, suggesting higher economic adjustment costs. Following recent empirical studies, we then test econometrically for the determinants of this trade using different measures of horizontal and vertical trade, and employing an array of popular explanatory variables. Results suggest that separating the measure of intra-industry trade into vertical and horizontal provides for better estimation and supports the contention that the determinants may differ by type of trade. In the regression analysis, the level of intra-industry trade is found to serve as a better dependent variable than the degree or share of intra-industry trade.

IDENTIFICATION OF MARKET POWER IN THE HUNGARIAN DAIRY INDUSTRY: A PLANT-LEVEL ANALYSIS

Abstract The objective of this paper is to provide an alternative model which can be used to test for oligopsony market power applying plant-level data. For this purpose, we took into account empirical studies and specific developments in the Hungarian dairy industry and specified a model that provides useful benchmarks for an econometric test of market power. The results of the econometric analysis show that the effects from policy changes in Hungary, as well as from plant specific issues are highly statistically significant, and produce evidence suggesting the exercise of oligopsony market power in the Hungarian dairy industry.

Intra-Industry Trade in Agri-Food Products between Hungary and the EU

We present an analysis of the intra-industry nature of agri-food trade between Hungary and the European Union, following the Association Agreement signed in 1991. A slight growth in intra-industry trade (IIT) is indicated by the Grubel-Lloyd index. However, it is not uniform by product group or EU member state or over time, reflecting different patterns of bilateral integration and an economic restructuring process that is far from complete. Marginal IIT appears to be low, but assumes greater significance when the index is broadened to include vertical as well as horizontal IIT. Accordingly, the structure of the change in agri-food trade between Hungary and the EU during the period is shown to be predominantly either intra– industry of a vertical nature or inter-industry. Both are believed to incur adjustment costs that are higher than with horizontal IIT, but the dominance of vertical IIT suggests that the agri-food industries of Hungary and the EU may be developing in a complementary manner, involving somewhat lower adjustment costs than may have been feared.

Marketing and pricing dynamics in the presence of structural breaks - the Hungarian pork market

The study of marketing margins and price transmission on various commodity markets has been a popular research topic of the past decades (see Meyer & Von Cramon-Taubadel, 2004, for a recent survey). However, with a few exception these studies focused on developed economies. This article examines this phenomena on the Hungarian pork market. The Johansen (maximum likelihood, 1988) or Engle and Granger (2-step, 1987) cointegration tests do not reject the no-cointegration null hypothesis between the Hungarian pork producer and retail price series. Therefore, we applied the Gregory and Hansen (1996) procedure with recursively estimated break points and Augmented Dickey Fuller (ADF) statistics and found that the prices are cointegrated with a structural break occurring in April 1996. Exogeneity tests reveal the causality running from producer to retail prices both in the long and short run. Homogeneity tests are rejected, suggesting a markup pricing strategy. Price transmission modeling suggests that price transmission on the Hungarian pork meat market is symmetric in the long run but asymmetric in the short run; that is, processors, wholesalers, or retailers might take temporary advantage should price changes occur.

Agro-food trade sustainability in Central and Eastern Europe

The article applies recent methodological developments in international trade to evaluate agro-food trade sustainability in selected Central and Eastern European (CEE) countries with the European Union and their implications for sustainable agro-food sectors and rural development. Trade in bulk primary raw agricultural and wood commodities is found to perform the best and consumer-ready foods the least. The empirical results imply a clear sign of an inefficient agro-food trade adjustment for the analysed CEE countries, but with large variations across countries, by product groups and over time.

Dynamics of intra-industry trade and adjustment costs. The case of Hungarian food industry

The structure of Hungarys food trade expansion over the transition period 1992 to 2002 and its implications for labour-market adjustment is examined. An econometric analysis of trade and employment data suggests that changes in domestic consumption and productivity have significant influence on employment changes. But our results do not provide support for the smooth-adjustment hypothesis of intra-industry trade.