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Abstract
This paper explores possibilities and opportunities of expansion of horticultural exports
from developing countries through an investigation on a rapidly growing market, Japan, as
an example among major promising markets. In this paper six horticultural commodities are
selected to analyze, emphasizing on exports from developing countries.
Observations on Japan's horticultural imports make us presume that consumers differentiate
products by place of production. Therefore, import behavior is considered in a
two-stage budgeting procedure. The second-stage demands for imports from different
sources are specified in an almost ideal demand system (AIDS) model and estimated
statistically as well as the first-stage import demand equations. The estimated second-stage
AIDS equations show that the magnitude of own-price coefficients varies with the source of
imports and so does that of expenditure coefficients. Therefore, the characteristics of
import demand on a commodity basis, which are captured by the estimates of the first-stage
import demand equations, are not equally transmitted to the demand for imports by source
in each commodity.
The estimated coefficients of the first-stage import demand and the second-stage AIDS
equations were combined to obtain the total effects of price and income changes on imports
by source. The calculated own-price elasticities are greater than one in absolute value in ten
of the 15 cases and so are the calculated income elasticities in twelve cases. The large
elasticities promise suppliers that they benefit from Japan's income growth and that they
increase their earnings if they can reduce the price by lowering their costs.
However, factors in non-price competition also play import roles in the import growth. In
this paper, the importance of sales promotions by exporters and preshipment inspections
was indicated in the cases of mangoes and cut flowers. Other factors such as market
structure and public infrastructure for post-harvest activities were also discussed.