THE CONTRIBUTION OF MODERN INFORMATION AND COMMUNICATION TECHNOLOGY TO SPATIAL MAIZE MARKET INTEGRATION IN ETHIOPIA

Abstract

This paper tries to analyze whether the expansion of modern information and communication technology has a significant impact in increasing the level of integration between spatially separated sample maize markets in Ethiopia. A total of 14 markets are taken for this analysis including the central market (Addis Ababa) and the other thirteen regional markets from various parts of the country and monthly retail price data starting from January 2003 to December 20014 is taken and partitioned into before and after ICT periods. A threshold autoregressive (TAR) model in the form of error correction method is used to analyze the data and the result shows, the overall integration between Addis Ababa and the respective regional markets is increased in the after ICT period. Regarding the deficit and surplus areas, in the before ICT period, the level of integration between markets is higher in surplus areas than in deficit areas, but in the after ICT period, the level of integration is not determined by the amount production. This is indicated by speed of adjustment of the error correcting terms which shows, in the before period the deviation from the equilibrium was not adjusted immediately in deficit markets than the surplus markets both in the above and below the threshold level but in the after period, the speed of adjustment is improved in both types of markets. The study proposes that coordinated infrastructure development is required through government intervention as communication alone does not bring the required result and expansion of modern commodity exchanges is highly recommended to increase grain market integration.