Impact of globalization on Spatial Price Linkages in chillies: Empirical analysis using Cointegration Test

Abstract

  Commodity price trends affect the incidence of poverty through their impact on employment opportunities and earnings of producers. At the farm household level, the impact of price change depends on whether global and border price trends are passed through to the producer at local level and whether improvements in productivity and production are able to compensate in a context of falling prices. Hence, the importance of the present study lies in the fact that, the domestic price trends and its movements with world market price of chillies are likely to have profound influence on the levels of living of millions of people (both workers and farmers) who depend either directly or indirectly on the cultivation of this crop. The central focus of the present paper is to address two interrelated issues of chillies – the extent of co-movement of chilli prices in the domestic and world markets and the bearing of WTO measures on the extent of transmission of world prices to the domestic markets.