Fear of food: the effect of food scares on international trade flows
Food scares are serious bacterial or viral infections in the stock of food commodities which become part of the public consciousness via the news media. These events seem to be increasing in recent years, and critics point to flaws in the processes by which countries monitor food safety. Many studies have looked anecdotally at the economic effects of these food scares, examining what happens to international trade, commodity prices, and domestic industries in the wake of individual food scares. This study is the first to pool commodity export quantity data in an attempt to discern a more general "food scare effect" on international trade flows. Using an empirical specification that controls for country-specific and time period-specific unobservables, I found statistically significant "food scare effects" for poultry, pork, and beef. My models show that exports fall between 81-99% after a scare, and the effect is still present, though smaller, in subsequent years. A Seemingly Unrelated Regression model also found significant cross-scare effects. While this study has little to say about public health, it has implications for food safety regulators and industry players who wish to augment their cost-benefit analysis toolboxes.
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Falkner, Robert, ed. (2007)
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