An econometric investigation of EU's import demand for fresh potato : a source differentiated analysis focusing on Egypt

Abstract

Purpose – A better understanding of the determinants of demand through accurate estimates of the elasticityof import demand can help policymakers and exporters improve their market access and competitiveness. This study analyzed the EU’s demand for imported potato from major suppliers between 1994 and 2018, with the aim to evaluate the competitiveness of Egyptian potato. Design/methodology/approach – This study adopted an import-differentiated framework to investigatedemand relationships among the major potato suppliers to the EU’s. To evaluate the competitiveness of Egyptian potato on the EU market, expenditure and price demand elasticities for various suppliers werecalculated and compared. Findings – The empirical results indicated that as income allocation of fresh potatoes increases, theinvestigated EU markets import more potatoes from other suppliers compared to imports from Egypt. The results show that EU importers may switch to potato imports from other suppliers as the import price ofEgyptian potatoes increases, which enter the EU markets before domestically produced potatoes are harvested. Research limitations/implications – Due to data unavailability, the present study relied on yearly data onquantities and prices of EU potato imports. A higher frequency of observations should allow for consideringseasonal effects, and thereby providing a more transparent picture of market dynamics and demand behaviorof EU countries with respect to potato import from various sources of origin. Originality/value – The study used a system-wide and source differentiated approach to analyze importdemand. In particular, the empirical approach allowed for comparing different demand models (AIDS,Rotterdam, NBR and CBS) to filter out the superior and most suitable model for that data because the suitabilityand performance of a demand model depends rather on data than on universal criteria.