SPATIAL INTEGRATION OF MAIZE MARKETS IN POST-LIBERALIZED UGANDA

Using weekly price data for two sub-periods, this paper analyzes how Ugandanmaize market performed in the years following agricultural market liberalization in theearly 1990’s. For each time period, the extent of integration, causality among spatiallocations, and relative importance of spatial locations in price formation are examined.The extent of integration, defined as a set of markets that shares common long-run priceinformation, and the causal relationships among markets have been tested withinJohansen’s cointegration framework. The relative importance of each market locations isexamined by estimating the common trend coefficients with a dynamic vector movingaverage model. Results indicate that, while there has been an overall improvement inspatial price responsiveness, the northern districts, which have been in a state ofinsurgency since 1986, continue to lack integration with major consumption markets inthe central region. Causality test results show that compared to the 1993-1994-timeperiod, representing the early years of liberalization, interdependence among markets hasincreased. Estimates of the common integrating trend suggest that public policies, such asprice stabilization, can have desired impacts by targeting a small number of locations.These results are consistent with recently conducted household and market surveys in thecountry.