Analyzing uae’s imports of fresh fruits utilizing an almost ideal demand system
Keywords:
LA/AIDS model, import demand, fresh fruits, uncompensated and compensated elasticityAbstract
This paper provides estimates of expenditure and price elasticity for imported fresh fruits in UAE using a Linear Approximate Almost Ideal Demand System (LA /AI DS) over the period 1990-2007. Results showed that uncompensated or Marshallain own price elasticity of import demand have negative signs and inelastic except for grapes and oranges. All cross-price elasticity among the six commodities is inelastic. Grape imports are substitutes for banana, date, mango and orange imports. Apple imports are substitutes for date and orange imports. Results also show that apple imports are complements to banana, mango and grape imports. Banana imports complement the imports of all the other five fruits. However, there is no cross-price elasticity between orange imports and date imports. All Compensated or Hicksian own price elasticity have the expected signs and inelastic except for grapes. All compensated own price elasticity is relatively inelastic except for grapes, which is greater than one at -1.44. Banana and dates are complementary goods with mango and orange imports. Grape imports are substitute with apple, banana, date, and mango imports. Apple imports are substitute for banana, date, grape and orange imports. From the expenditure elasticity, both banana and grape imports appear to be luxury fresh fruits with expenditure elasticity greater than one. Other three fresh fruits are to be considered necessities as their expenditure elasticity are less than one while date imports had negative expenditure elasticity.
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