Application of Stochastic Frontier Gravity Model for Determining Seafood Export

Document Type : Original Research

Authors
M. Aminizadeh 1
H. Mohammadi 1
A. Karbasi 1
H. Rafiee 2
1 Department of Agricultural Economics, Faculty of Agriculture, Ferdowsi University of Mashhad, Mashhad, Islamic Republic of Iran.
2 Department of Agricultural Economics, Faculty of Agriculture, University of Tehran, Tehran, Islamic Republic of Iran.
10.22034/JAST.27.1.1
Abstract
The efficiency estimation of industry-specific exports plays a vital role in identifying export potentials and appropriate marketing strategies. This paper aimed to investigate the main determinants of Iran’s seafood exports to its 32 trading partners from 2001 to 2018, using the Stochastic Frontier Gravity (SFG) model. Moreover, this paper analyzed the efficiency and export potentials of Iran’s seafood to its trading partners. The findings confirmed the consistency of SFG for Iran’s seafood exports. The results indicated that the Gross Domestic Product (GDP) of Iran and its trading partners had significant positive effects. In contrast, the bilateral exchange rate, common border, common religion, distance, economic crisis, and sanctions had significant negative effects on Iran’s seafood exports. In addition, the results of export efficiency revealed that Iran has great export potential to its trading partners, particularly neighboring countries. People's awareness of the benefits of seafood in neighboring countries with low consumption can increase their demand and increase Iran's exports to them. Considering the high export potential in these countries with high religious and cultural similarities, it is suggested that Iran should strengthen its food trade relations with neighboring countries such as Iraq, Turkmenistan, Lebanon, Kuwait, the United Arab Emirates, and Afghanistan.

Keywords

Subjects

References:
1. Abdullahi, N. M., Zhang, Q., Shahriar, S., Irshad, M. S., Ado, A. B., and Huo, X. 2022. Examining the determinants and efficiency of China’s agricultural exports using a stochastic frontier gravity model. PLoS One, 17(9): e0274187.
2. Ahmad Hamidi, H. N., Khalid, N., Karim, Z. A., and Zainuddin, M. R. K. 2022. Technical Efficiency and Export Potential of the World Palm Oil Market. Agriculture, 12(11): 1918.
3. Aigner, D., Lovell, C.K., and Schmidt, P. 1977. Formulation and estimation of stochastic frontier production function models. J. econom., 6(1): 21-37.
4. Asche, F., Bellemare, M. F., Roheim, C., Smith, M. D., and Tveteras, S. 2015. Fair enough? Food security and the international trade of seafood. World Dev., 67: 151-160.‏
5. Atif, R. M., Haiyun, L., and Mahmood, H. 2017. Pakistan's agricultural exports, determinants and its potential: an application of stochastic frontier gravity model. J. Int. Trade Econ. Dev., 26(3): 257-276.
6. Atif, R.M., Mahmood, H., Haiyun, L., and Mao, H. 2019. Determinants and efficiency of Pakistan’s chemical products’ exports: An application of stochastic frontier gravity model. PLoS One, 14(5): 1-15.
7. Baek, J. 2013. Does the exchange rate matter to bilateral trade between Korea and Japan? Evidence from commodity trade data. Econ. Model., 30: 856-862.‏
8. Battese, G.E., and Coelli, T.J. 1988. Production of firm level efficiencies: With a generalized frontier production function and panel data. J. Econom., 38: 387–399.
9. Bělín, M., and Hanousek, J. 2021. Which sanctions matter? Analysis of the EU/Russian sanctions of 2014. J. Comp. Econ., 49(1): 244-257.‏
10. Bellmann, C., Tipping, A., and Sumaila, U. R. 2016. Global trade in fish and fishery products: An overview. Mar. Policy, 69: 181-188.
11. Bostan, I., Toderașcu, C., and Firtescu, B. N. 2018. Exchange rate effects on international commercial trade competitiveness. J. risk financ. manag., 11(2): 19.‏
12. Cai, J., and Leung, P. 2022. Unlocking the potential of aquatic foods in global food security and nutrition: A missing piece under the lens of seafood liking index. Glob. Food Sec., 33: 100641.
13. Caliński, T., and Harabasz, J. 1974. A dendrite method for cluster analysis. Commun. Stat. Theory Methods, 3(1): 1-27.
14. Castro, Ó., Borrull, S., Riu, J., Gimeno-Monforte, S., Montesdeoca-Esponda, S., Sosa-Ferrera, Z., Santana-Rodríguez, J.J., Pocurull, E and Borrull, F. 2023. Seafood consumption as a source of exposure to high production volume chemicals: A comparison between Catalonia and the Canary Islands. Food Chem. Toxicol., 175: 113729.
15. Centre d'Etudes Prospective et d'Informations Internationals. 2022. CEPII Database. Available at http://www.cepii.fr/
16. Chan, C. Y., Tran, N., Pethiyagoda, S., Crissman, C. C., Sulser, T. B., and Phillips, M. J. 2019. Prospects and challenges of fish for food security in Africa. Glob. Food Sec., 20: 17-25.
17. Chizari, A. H., and Sadafi Abkenar, S. 2020. Impact of price and non-price factors on the Iranian Pistachios Market. J. Agric. Sci. Technol., 22(6): 1415-1430.
18. Dong, C. V., and Truong, H. Q. 2023. Determinants and potential of seafood trade: evidence from a transitional economy. Foreign Trade Rev., 58(3): 428-454.‏
19. Ferto, I., and Szerb, A.B. 2017. The role of food crisis and trade costs in the Hungarian maize exports. P. Agric. Econ., 353(4): 110-124.
20. Food and Agriculture Organization. 2022. Available at https://www.fao.org/faostat/en/#home
21. Garlock, T., Asche, F., Anderson, J., Ceballos-Concha, A., Love, D.C., Osmundsen, T.C., and Pincinato, R.B.M. 2022. Aquaculture: The missing contributor in the food security agenda. Glob. Food Sec., 32: 100620.
22. Gupta, A. K., and Sangita, S. 2022. Impact of Food Standards on Patterns of International Trade in Marine Products. Foreign Trade Rev., 00157325221121433.‏
23. International Trade Center. 2022. Available at https://www.trademap.org/
24. Iran Fisheries Organization. 2022. Available at https://www.fisheries.ir/
25. Kalirajan, K. 1999. Stochastic varying coefficients gravity model: an application in trade analysis. J. Appl. Stat., 26(2): 185-193.
26. Kalirajan, K. 2007. Regional Cooperation and Bilateral Trade Flows: An Empirical Measurement of Resistance. Int. Trade J., 21(2): 85–107.
27. Kareem, O.I. 2016. Food safety regulations and fish trade: Evidence from European :union:-Africa trade relations. J. Com. Mark., 2(1): 18-25.
28. Kim, C. M., Kim, D. E., and Lim, S. S. 2023. Assessing the Seafood Trade Diversion Arising from Economic Sanctions: Evidence from Russia and Western Countries. Foods, 12(21): 3934.‏
29. Krešić, G., Dujmić, E., Lončarić, D., Zrnčić, S., Liović, N., and Pleadin, J. 2022. Fish Consumption: Influence of Knowledge, Product Information, and Satisfaction with Product Attributes. Nutrients, 14(13): 2691.‏
30. Liu, Z., and Zhou, X. 2023. Can Direct Subsidies or Tax Incentives Improve the R&D Efficiency of the Manufacturing Industry in China? Processes, 11(1): 181.
31. Menozzi, D., Sogari, G., Simeone, C., Czajkowski, M., Zawadzki, W., Bazoche, P., ... and Aanesen, M. 2023. Positive versus negative information: What is really shifting consumers’ intention to eat Norwegian salmon? Evidence from three European countries. Food Qual. Prefer., 108: 104871.‏
32. Mohammadi, H., Aminizadeh, M. and Aghasafari, H. 2020. Investigating the Iran’s Export Efficiency in Pistachio Target Markets: Application of Stochastic Frontier Gravity Model. Agric. Econ. Dev., 34(1): 1-18.
33. Mohammadi, H., Saghaian, S., Aminizadeh, M., and Aghasafari, H. 2020. Food Safety Standards and its effects on Iran's Fish Exports. Iran. J. Fish Sci., 19(6): 3075-3085.
34. Natale, F., Borrello, A., and Motova, A. 2015. Analysis of the determinants of international seafood trade using a gravity model. Mar. Policy, 60: 98-106.‏
35. Nguyen, D.D. 2022. Determinants of Vietnam's rice and coffee exports: using stochastic frontier gravity model. J. Asian Bus. Econ. Stud., 29(1): 19-34.
36. Obeng, C. K., Boadu, M. T., and Ewusie, E. A. 2023. Deep preferential trade agreements and export efficiency in Ghana: Do institutions matter?. Res. Glob., 6: 100112.
37. Rafiee, H., Aminizadeh, M., Hosseini, E. M., Aghasafari, H., and Mohammadi, A. 2022. A cluster analysis on the energy use indicators and carbon footprint of irrigated wheat cropping systems. Sustainability, 14(7): 4014.
38. Ravishankar, G., and Stack, M.M. 2014. The Gravity Model and Trade Efficiency: A Stochastic Frontier Analysis of Eastern European Countries' Potential Trade. World Econ., 37(5): 690-704.
39. Shepherd, B., and Wilson, N. L. 2013. Product standards and developing country agricultural exports: The case of the European :union:. Food Policy, 42: 1-10.‏
40. Shepotylo, O. 2016. Effect of non-tariff measures on extensive and intensive margins of exports in seafood trade. Mar. Policy, 68: 47-54.‏
41. Stetkiewicz, S., Norman, R.A., Allison, E.H., Andrew, N.L., Ara, G., Banner-Stevens, G., Belton, B., Beveridge, M., Bogard, J.R., Bush, S.R., Coffee, P., Crumlish, M., Edwards, P., Eltholth, M., Falconer, L., Ferreira, J.G., Garrett, A., Gatward, I., Islam, F.U., Kaminski, A.M., Kjellevold, M., Kruijssen, F., Leschen, W., Mamun, A.A., McAdam, B, Newton, R., Krogh-Poulsen, B., Pounds, A., Richardson, B., Roos, N., Röös, E., Schapper, A., Spence-McConnell, T., Suri, S.K., Thilsted, S.H., Thompson, K.D., Tlusty, M.F., Troell, M.F., Vignola, R., Young, J.A., Zhang, W., and Little, D.C. 2022. Seafood in Food Security: A call for bridging the terrestrial-aquatic divide. Front. Sustain. Food Syst., 504.
42. Tandra, H., and Suroso, A.I. 2023. The determinant, efficiency, and potential of Indonesian palm oil downstream export to the global market. Cogent Econ. Financ., 11(1): 2189671.
43. Tarakçı, D., Ölmez, F., and Durusu-Ciftci, D. 2022. Exchange rate volatility and export in Turkey: Does the nexus vary across the type of commodity?. Cent. Bank Rev., 22(2): 77-89.
44. Tinbergen, J. 1962. Shaping the World Economy: Suggestions for an International Economic Policy (New York: Twentieth Century Fund).
45. Tveterås, S., Asche, F., Bellemare, M. F., Smith, M. D., Guttormsen, A. G., Lem, A., Lien, K., and Vannuccini, S. 2012. Fish is food-the FAO’s fish price index. PLoS One, 7(5): e36731.
46. World Bank. 2022. World Bank Database. Available at https://databank.worldbank.org.
47. Xu, H., Nghia, D. T., and Nam, N. H. 2023. Determinants of Vietnam's potential for agricultural export trade to Asia-Pacific economic cooperation (APEC) members. Heliyon, 9(2).
48. Xu, J., Lu, C., Ruan, S., and Xiong, N.N. 2022. Estimating the efficiency and potential of China's steel products export to countries along the “Belt and Road” under interconnection: An application of extended stochastic frontier gravity model. Resour. Policy, 75: 102513.
Journal of Agricultural Science and Technology
Volume 27, Issue 1
January and February 2025
Pages 1-15