Abstract:
Due to the complexity and dynamism of the global beef market, policymakers need a theoretically
consistent, rigorous and quantitative analysis to validate and quantify the effects of different factors
that are believed to drive beef trade. The general objective of this dissertation was to validate and
quantify the factors that drive and influence international beef trade in order to facilitate and
improve the decision-making behaviour of policymakers. The gravity model methodology was
identified as the ideal framework to address the general objective of this dissertation, and was used
as the primary tool to analyse the factors that drive and influence beef trade. The specific objectives
were to gain an understanding of prominent issues that influence international beef trade, to review
the gravity modelling methodology and to model the effects of various issues on the volume of beef
trade based on trade data among leading importers and exporters between 1996 and 2010. A model was estimated using two separate equations, referred to as Model B1 and Model B2. For
each of these equations the dependant variable varied to represent: bovine cuts boneless, fresh or
chilled (HS 020130); bovine cuts boneless, frozen (HS 020230); and an aggregation of these two
products designated as "Total beef". Model B1 was estimated with the full gravity model
specification, including export prices. Since very few studies on commodity specific gravity
models exist and have never modelled beef exports prices directly, it was decided to run an
additional model, Model B2, without the export price variable. The Wald Chi-square test
confirmed that the variables included in the model were significant in explaining the variation in the
volume of exports. Issues that were included in the specification included beef production in a beef
exporter, beef consumption in a beef importer, tariff measures applied by importing countries,
income per capita of consumers in importing countries, export prices and trade bans due to animal
diseases.
The coefficients of individual variables estimated were found to be plausible while the signs of the
coefficients indicated the expected relationships between the volume of beef trade and each of the
individual issues. After comparing the two models it was found that the price variable exhibited
statistically significant and plausible results, and did not affect the estimates of the other variables.
A comparison with similar studies revealed that the model developed in this dissertation estimated
similar results in some areas, and even more plausible results in others. When all of the statistical
tests and validation criteria are taken into account, the gravity model developed in this dissertation
was successful in validating and quantifying the factors that drive and influence international beef
trade.
