Has Trade Liberalization Improved Food Security? A Comparative Study on China and Sri Lanka

Abstract

Trade liberalization is assumed to be the driving force of economic development of the developing countries. China and Sri Lanka have gradually opened their economies to foreign trade with the expectation of eliminating poverty which is the main cause of food insecurity. Though both countries posses some similar characteristics, they are different in size in the world market. Sri Lanka is regarded as a small economy while China is known as a large economy which has economic power to influence on world market. Hence, the main purpose of this study is to investigate whether trade liberalization has differently influenced on food security of China and Sri Lanka. The study employed time series multiple regression technique to investigate the effect of trade liberalization on food security of the two countries for the 1980 - 2009 period. The findings of the study support the statement that trade liberalization has not significantly influenced on food security of China. However, it is found a negative and weak relationship between trade liberalization and food security with regards to Sri Lanka. The key variable significantly influenced on the food security of two countries is the real GDP level and it shows a strong positive association with food security during the study period. The changes of imported food prices have been a key influential factor in determining food security of Sri Lanka but were not a significant factor to influence to the food security of China.

Keywords: Food Security, Trade Liberalization, Developing Countries, Poverty