Impact of market liberalization on international pulses trade of myanmar and India

Abstract

Before 1990, international trade of pulses did not well develop because of trade restrictions in major export and import countries. India and Myanmar are major trade partners of pulses because Myanmar pulses favor consumer preference, low freight charge and fast delivery. There are still major trade restrictions of pulses such as minimum support price program, high levy of import tax and export banning policy in India, and high levy of export tax and misalignment exchange rate system in Myanmar. In Johansen cointegration test, all prices of international markets were weakly integrated in long run. In VECM test, India had negative equilibrium condition in all pulses while Myanmar had positive equilibrium conditions. India could correct the deviation of price in long run equilibrium with 19% in black gram, 16% in green gram, and 35% in pigeon pea, within a month. In Granger causality test, all prices of Myanmar Granger caused India except in black gram. India Granger caused Myanmar black gram price. Myanmar is a leading country for international price formation. But, there was unidirectional causality in international price of pulse. It indicated the monopolistic behavior and asymmetry price transmission in the international markets of pulses. This imperfect and asymmetry price transmission may be the results of quantitative restrictions of trade, misalignment exchange rate system and high levy of export and import taxes in pulses trade.