Evaluating the Impacts of Information and Communication Technology (ICT) on Trade in Fruit and Vegetables within the APEC Countries

The global food marketing network is being constantly reshaped, providingopportunities and challenges to the use of information and communication technology(ICT) to develop international trade in food products. ICT is likely to be especiallyimportant for food products such as fresh fruit and vegetables that are differentiatedand sensitive to timeliness in supply, possess varied quality dimensions, and involveconsiderable supply accumulation and assortment. Digital ICT (Internet and mobilephones), in particular, is expected to facilitate international trade and encourageefficiency in the fruit and vegetables marketing system in two main ways. First, itreduces communication and search costs through cheaper and more effective media.Second, it improves market information and corrects information externalities alongthe supply chain, by promoting greater price transparency and enabling consumerpreferences and tastes to be more precisely met.We employed a gravity model of international trade to test the hypothesis that ICTpositively affects bilateral international trade in fruit and vegetables between memberAsia-Pacific Economic Cooperation (APEC) economies in the period from 1997 to2006. Explanatory variables include the usage of the Internet, mobile telephones andfixed telephone lines, and a broad range of factors that might determine the value ofbilateral trade such as income per capita, population, distance between tradingpartners and common language. A Poisson pseudo-maximum likelihood model wasestimated in order to handle zero trade observations and reduce biases caused byheteroskedasticity. Empirical results were not quite as expected, with relatively minorimpact of digital ICT. They suggest that using digital ICT has significant positiveeffects on trade in fruit and vegetables between APEC countries only for the Internetin exporting countries. A stronger positive impact was discerned for the traditionalform of ICT, fixed telephone lines in exporting importing countries. Nevertheless,fostering the development of digital ICT infrastructure and its diffusion should makeexporters in APEC countries more competitive in the fruit and vegetables supplychain through the Internet effect, and boost their trade values in these products.