The Review on the Link between Food and Oil Markets in the View of Price Dynamics

Abstract

The long established link between food and oil prices in the global market is still uncertain in cross-country, regional and domestic analyses. In this paper, we review theoretical and empirical submissions on the nexus between food and oil market. Qualitative content analysis was used to critically analyze concepts and theories based on the past empirical evidences. The analysis shows that there is hardly a consistent and generalized submission on the direction of the relationship between oil price and agricultural commodity prices, as against the popular notion of co-movement between food and oil prices among researchers. However, studies on cross country analysis are scarce and among them, very few are related to oil exporting countries, hence the need to revisit the unending debate on the relationship between the two important markets based on economic structure (oil exporting/importing economy), capacity of an economy (high/low income economy) and the causes and nature of crisis in the markets.