SPATIAL PRICE INTEGRATION AND PRICING EFFICIENCY OF EXPORT MARKETS LEVEL: A CASE OF BANGLADESHI EXPORTABLE FRESH VEGETABLES MARKETS

The paper examined the pricing efficiency of exportable fresh vegetables markets in Bangladesh and its export markets by using Engle-Granger (EG) test, Cointegration Regression for Durbin Watson (CRDW) test and Error Correction Methods (ECM). For the test of pricing efficiency of exportable fresh vegetables markets, the monthly export earnings data were used to test cointegration from July 2004-05 to July 2006-07 yielding a total of 36 observations. Engle-Granger test was used to estimate the integration among the fresh vegetables exports markets in Bangladesh. In the cointegrating set up, error correction method estimated the long-run relationship between Bangladesh and selected export markets. The vegetables export markets of UK-Saudi Arabia, UK-UAE markets and UK-Singapore markets are not integrated and these markets prices were non-responsive. Bangladesh-UK; Bangladesh-UAE; Bangladesh-Singapore; UAE-Saudi Arabia and UAE-Singapore markets are highly integrated due to having the facility of information technology, which closely connected the markets to each other. Bangladesh-UK; Bangladesh-Saudi Arabia; Bangladesh-UAE, Bangladesh-Singapore and Saudi Arabia-UAE markets are found strong form of market integration due to congenial atmosphere existed in these markets. The rest combinations of markets do not support the strong form of market integration because of complication of export procedures, lack of bi-lateral agreement. The speed of price adjustment (8) ranges from 9% to 66 % indicating that price adjustment takes around 3 to 20 days in transmitting information from one market to the others export markets. The highest percentage speed of adjustment was found in Bangladesh and UK markets. This exhibits that if any divergence appears from the long-run equilibrium, it is adjusted towards the equilibrium value by the speed of 66% or 20 days. Price adjustments among the selected export markets were found to be quicker in Bangladesh-United Arab Emirates market (3 days)