Evaluating the Competitiveness of US Agricultural Market Commodities

Abstract

This dissertation is organized into three different topics in the field of international trade and economics that look at the competitiveness of US agricultural export commodities using different economic models and techniques. The first topic determines the impact of public R&D investments, Human Capital, and the competitiveness of US agricultural export commodities. The study generates an R&D and human capital index that is used to analyze the competitiveness of four US agricultural export commodities against the competitors. The results of the study indicate that investments in R&D influence agricultural commodity exports while the effect of human capital on agricultural commodities exports is mixed.

The second topic uses specific factor model of production to predict the effects of projected output and price adjustment on the competitiveness of US genetically modified (GM) crops. The findings of the study demonstrate a positive relationship between successful adoption of GM technology and the projected adjustments in output and prices. Soybeans and corn sectors which have been most successful in adopting GM technology are found to have low elasticities of supply with respect to prices. While supply elasticity is an indicator of speed and magnitude of output adjustments as a result to changes in commodity price, lower elasticities make it possible for soybeans and corn sectors to lower their prices, without significant reduction in output. This makes them more competitive than crops that have not successfully adapted to GM technology.

The third topic uses Almost Ideal Demand System (AIDS) model approach to evaluate the competitiveness of US wheat. Using the AIDS model approach to generate price and income elasticities as indicators of product differentiation, the study evaluates US wheat competitiveness against Australian wheat in the Egyptian market. The study also evaluates if the AIDS model can be used as a measure of agricultural export commodities competitiveness especially for commodities from different origins with perceived quality differences.

Results from the study find that Australia has defended its market share and maintained higher prices by differentiating its wheat through creating a perception that its wheat is of better quality. Also, the US has a lower own-price elasticity may be an advantage in the short to medium term when the Egyptian economy is weak and foreign exchange has been especially tight. However, for US wheat to be competitive in the longer term it is necessary for the wheat industry to maintain lower prices, and improve its quality and quality image through effective promotional campaigns.