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Abstract
The Uruguay Round Agreement on Agriculture attempted to lower distortions in
the global agricultural markets. However, the significant fall in commodity prices in late
1990s may have reduced the incentives for both developed and developing countries to
better integrate into the world markets. This study analyzes price linkages and
adjustment between developed and developing countries during the post-Uruguay Round
period. Prices of two key commodity markets, long-grain rice and medium-hard wheat,
are assembled for major exporters and producers. Results from the multivariate
cointegration analysis suggest partial market integration between developed and
developing countries in the post-Uruguay Round period. Developed countries are found
to be price leaders in these two markets, and in most cases, the changes in their prices
have relatively large impacts on those of the developing countries. The new entrants into
world markets (Vietnam and Argentina) have faced considerable price adjustment due to
changes in the developed countries' prices.