Implications of Trade Liberalization for Food Security Under the ASEAN-India Strategic Partnership: A Gravity Model Approach

Implications of Trade Liberalization for Food Security Under the ASEAN-India Strategic Partnership: A Gravity Model Approach

Ishita Ghosh (Symbiosis International University, India) and Ishita Ghoshal (Symbiosis International University, India)
DOI: 10.4018/978-1-5225-8063-8.ch002
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The objective of the chapter is to understand India's role in providing food security through trade with the ASEAN under the India-ASEAN Strategic Partnership. A dynamic panel has been employed to assess and estimate the said objective, given that India and most of the ASEAN countries are considered emerging markets. Econometric investigation points out that while almost more than half the variables in the augmented gravity model hold good, food imports from India, agricultural labour force, common maritime border, distance from India, food price index, food production index, GDP (size) of the importing country, per capita GDP of the importing economy, and trade openness have statistically significant effect on the food trade from India to the ASEAN. Improving maritime infrastructure and agri-logistics, investing in climate change and water management while augmenting the agri-labour productivity are of paramount importance in order to improve food trade between India and the ASEAN.
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The world population is predicted to cross nine billion by the year 2050, resulting in growing concerns to ensure food security (Food and Agriculture Organization of the United Nations [FAO], 2001). Food security has had evolving definitions since the mid-1970s. The latest definition given as per the State of Food Insecurity, 2001, is: “Food security [is] a situation that exists when all people, at all times, have physical, social and economic access to sufficient, safe and nutritious food that meets their dietary needs and food preferences for an active and healthy life” (FAO, 2001).

In the modern context, it is not really a concern if the world is capable of meeting the growing demands to adequately cover calorific and nutritional demands; however, barriers to worldwide access such as political factors, ownership, institutions, poverty and inequality still pose a threat to global supply chains and distribution (Gillson & Fouad, 2016).

Improvements in food security have been noted in almost all the regions of the world and particularly in emerging markets (Emerging Market Economy, n.d.). An emerging market economy describes a nation's economy, that is, progressing toward becoming more advanced, usually by means of rapid growth and industrialization. These countries experience an expanding role both in the world economy and on the political frontier (Emerging Market Economy, n.d.). The Global Food Security Index [GFSI] (The Economist, 2016) mentions that barring Europe, the low-income and lower-middle-income countries have progressed towards ensuring better measures for food security, thereby reducing the global gap between the least and the most food secure nations. Although structural changes in economies have increased the access to a wide range of affordable and nutritious food, put in place more extensive food safety-net programs and expanded crop storage capacity and dietary diversity, food security still remains a concern and challenge in the modern day. Despite investment in infrastructure, most developing and emerging economies are still grossly short on road and port facilities that aid in accessing food. Also, absorbing urban migration is a gradual process – pressures of urbanization have been growing worldwide and agricultural labor is depleting, while there has been a downward trend in the world Gross Domestic Product (GDP) growth. Macroeconomic improvements and stability have been compromised by geopolitical turmoil and climate change (The Economist, 2016).

According to the Asian Development Bank [ADB] (2016), two-thirds of the world's one billion hungry reside in Asia and the Pacific. While food prices are rising, bringing about food shortages and malnutrition in the region’s poor, both rural and urban dwellers are forced to spend more than half of their income on food and related goods. The persistent volatility in food price has become an impediment to reaching the Millennium Development Goals, especially the ones related to the mitigation of hunger and poverty (Asian Development Bank, 2016).

The projected population growth that will reside in urban areas of Asia by 2026 is close to 50% of the constantly growing population. This will need comprehensive planning and significant investments to cater to food distribution, storage and marketing facilities to ensure food security. There will also be a heavy requirement of improved land cultivation techniques and labor productivity (Briones, Chavez, Durand-Morat, & Wailes, 2012).

Climate change also plays a vital role in ensuring food security. The Asia-Pacific El Niño has, and the predicted La Niña will cause droughts and hence, reduction in agricultural output. This has affected and will continue to affect inflation rates, poverty, exports, etc., adversely. Prolonged effects have may affect macroeconomic and geopolitical stability (El Niño in Asia, 2016; Tabor, Ginting, & Aji, 2015).

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