Assessing Comparative Advantage in Soybean Production: A Global Perspective
Moraes, Mauricio
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https://hdl.handle.net/2142/83000
Description
Title
Assessing Comparative Advantage in Soybean Production: A Global Perspective
Author(s)
Moraes, Mauricio
Issue Date
2008
Doctoral Committee Chair(s)
Hauser, Robert J.
Department of Study
Agricultural and Consumer Economics
Discipline
Agricultural and Consumer Economics
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
Ph.D.
Degree Level
Dissertation
Keyword(s)
Economics, Agricultural
Language
eng
Abstract
The structural changes that have taken place in the soybean market in recent years---with increasing participation of South America in the production and exports of soybeans---have altered the relationship among U.S. production, use, stocks, and price. As a result, supply and demand models that worked fairly well a few years ago are now inadequate. It is much more important now to estimate price and production responses in a world context, where comparative advantage changes and their impacts can be properly addressed. Econometric and mathematical programming methods are used here to construct a soybean global model based on the established trade theory. Results indicate that although Brazil does not have absolute advantage in soybean production it does have a strong comparative advantage over other major international suppliers. Sensitivity analyses of key variables suggest that the model is fairly robust to changes in yields, price and yield risk, storage costs, and interest rates. Results suggest that soybeans exports out of South America are likely to keep increasing, encouraging a partial shift in the U.S. production away from soybeans and toward corn. Results also suggest that the expansion of the corn-based ethanol market in the U.S. may accelerate the consolidation of South America as the major international supplier of soybeans.
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