Title: A dynamic analysis of US banana demand by source: a focus on Latin American suppliers

Authors: Andrew Muhammad; Steven Zahniser; Esendugue Greg Fonsah

Addresses: U.S. Department of Agriculture, Economic Research Service, Markets and Trade Economics Division, Washington, DC, USA ' U.S. Department of Agriculture, Economic Research Service, Markets and Trade Economics Division, Washington, DC, USA ' Department of Agricultural and Applied Economics, University of Georgia - Tifton Campus, Tifton, Georgia, USA

Abstract: We estimated US banana demand disaggregated by exporting country using the generalised dynamic Rotterdam model. Results indicated that dynamic factors, prices, and total expenditures played an important role in determining how the USA allocated banana imports across supplying countries. We were particularly interested in Guatemala's emergence as the leading US supplier and Costa Rica's decline. Overall, there was no significant difference in the demand estimates between the two countries. The dynamic adjustment estimates indicated that both countries were positively affected by their past exports, and the long-run expenditure elasticities indicated that both were particularly sensitive to changes in total US expenditures. However, demand estimates indicated that there is significant price competition between the two countries and the uncompensated price elasticities indicated that the demand for Costa Rican bananas was relatively more elastic in the long run.

Keywords: bananas; generalised dynamic Rotterdam model; imports; exports; USA; United States; banana demand; Latin American suppliers; dynamic factors; prices; total expenditure; Guatemala; Costa Rica; price competition; price elasticities.

DOI: 10.1504/IJTGM.2015.072791

International Journal of Trade and Global Markets, 2015 Vol.8 No.4, pp.281 - 296

Received: 03 Jun 2014
Accepted: 31 Jan 2015
Published online: 03 Nov 2015 *

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