HORIZONTAL MARKET INTEGRATION OF RUBBER AMONG SOME SELECTED MAJOR EXPORTING DEVELOPING COUNTRIES IN THE WORLD

Abstract

The research determined the horizontal market integration among the spatial major exporters of rubber viz. Ivory Coast, Indonesia, Philippines and Thailand in the world. Time series data from the FAO and UNCTAD data repositories that covered 51 years period (1966-2017) were utilized. The data were analyzed using descriptive and inferential statistics such as the unit root test, Johansen co-integration test and, restricted vector autoregressive (VAR) test. The empirical evidence showed presence of passive horizontal integration among the spatially separated markets. Compliance with the WTO policies makes the market prices of Ivory Coast to have effective linkages with the prices of all the selected markets; as trade war affected the price relationships between the latter markets viz. Indonesia, Philippines and Thailand; all situated in Asia. The market prices of Philippines and Thailand were not autarkic, thus the most efficient, as they are stable in the long-run and have the capacity to absolve any shocks that causes disequilibrium to its long-run equilibrium from any of the short-run. In addition, the market prices of Philippines and Thailand were more efficient as their prices were formed within the system while that of Ivory Coast and Indonesia depend on exogenous effect. The market prices of Thailand wield significant influence in price determination of rubber among the selected markets as the latter markets were relative follower in the international market. It was established that rubber marketing is useful in the international sphere as all the selected market prices witnessed persistent volatility. A high product quality will makes the market prices of Ivory Coast, Philippines and Thailand to be remunerative while poor quality coupled with sharp practices of oligopolistic middlemen will affect the market prices of Indonesia. Thus, the need for an effective marketing network that will enhance integration and efficient price communication among these markets is recommended.

Keywords

• developing countries
• ntegration
• international
• markets
• prices
• rubber