The European Market for ASEAN Agricultural Exports: Estimates of Income and Price Elasticities

This article provides new evidence on income and price elasticities of demand for agricultural exports from ASEAN countries. Econometric models are constructed for seven agricultural commodities — cassava, cocoa, coconut oil, palm oil, pepper, rubber, and tea — exported from ASEAN to the EU. A modelling approach based on the error correction mechanism is used in order to emphasize the importance of the dynamics of trade functions. The results indicate that there is a relatively weak demand response to income and price changes in the EU. However, the results also suggest that relative-price variations affect significantly the demand for ASEAN commodity exports, implying that the exporter's market share is influenced by price competitiveness.