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<u>Table 6. Coffee, cocoa and chocolate: three stage least squares estimates</u>

|||With la|gged infrast|ructure varia|bles||With c|urrent infras|tructure vari|ables instrum|ented|
|---|---|---|---|---|---|---|---|---|---|---|---|
|Market share equation 1/ 2/||||||||||||
|3/<br>*<br>ln<br>_jk_<br>_p_|-3.365 <sup>***</sup>|-2.418 <sup>***</sup>|-5.823 <sup>***</sup>|-1.922 <sup>*</sup>|-2.418 <sup>***</sup>|-2.418 <sup>***</sup>|-7.292 <sup>***</sup>|-2.418 <sup>***</sup>|-1.922 <sup>*</sup>|-2.418 <sup>***</sup>|-2.418 <sup>***</sup>|
||(0.908)|(0.760)|(0.745)|(1.112)|(0.760)|(0.761)|(0.808)|(0.763)|(1.112)|(0.758)|(0.764)|
|Constant|-8.234<br>***|-8.293<br>***|...|-10.285<br>***|-8.293 <sup>***</sup>|-8.293 <sup>***</sup>|...|-8.293 <sup>***</sup>|-10.285 <sup>***</sup>|-8.293 <sup>***</sup>|-8.293 <sup>***</sup>|
||(1.125)|(1.081)|...|(1.248)|(1.081)|(1.082)|...|(1.085)|(1.248)|(1.078)|(1.087)|
|Price equation 4/||||||||||||
|Road density|-0.193 <sup>**</sup>||||||-0.180 <sup>*</sup>|||||
||(0.097)||||||(0.095)|||||
|Teledensity||0.483 <sup>*</sup>||||||0.349||||
|||(0.293)||||||(0.269)||||
|Rural teledensity|||0.091|||||||||
||||(0.056)|||||||||
|Electricity consumption||||0.009|||||0.009|||
|||||(0.015)|||||(0.014)|||
|Water access|||||0.019 <sup>***</sup>|||||0.010 <sup>***</sup>||
||||||(0.006)|||||(0.004)||
|Rural water access||||||0.015 <sup>***</sup>|||||0.017 <sup>***</sup>|
|||||||(0.005)|||||(0.005)|
|_ΔER_|0.023 <sup>*</sup>|0.007|0.004|-0.005|0.008|-0.003|0.021 <sup>*</sup>|0.011|-0.005|0.014|0.005|
||(0.012)|(0.012)|(0.009)|(0.007)|(0.011)|(0.011)|(0.012)|(0.011)|(0.007)|(0.010)|(0.010)|
|ln_s jk_|-0.150 <sup>***</sup>|-0.186 <sup>***</sup>|-0.132 <sup>***</sup>|-0.159 <sup>***</sup>|-0.182 <sup>***</sup>|-0.124 <sup>***</sup>|-0.151 <sup>***</sup>|-0.218 <sup>***</sup>|-0.159 <sup>***</sup>|-0.176 <sup>***</sup>|-0.132 <sup>***</sup>|
||(0.049)|(0.045)|(0.044)|(0.049)|(0.060)|(0.044)|(0.052)|(0.049)|(0.049)|(0.058)|(0.044)|
|Constant|0.176|-0.922 <sup>*</sup>|-0.150|-0.890|-2.176 <sup>**</sup>|-1.387 <sup>*</sup>|0.164|-1.094 <sup>**</sup>|-0.890|-1.220|-1.576|
||(0.505)|(0.486)|(0.313)|(0.552)|(0.972)|(0.715)|(0.534)|(0.548)|(0.552)|(0.774)|(0.748)|
|Obs.|176|189|137|228|166|163|144|186|228|163|157|
|Weather variables|Yes|Yes|Yes|No|Yes|Yes|Yes|Yes|No|Yes|Yes|
|Number of country dummies|62|67|49|80|58|57|50|66|80|57|55|
|Chi-square statistics||||||||||||
|<br>Market share equation|198.9 <sup>***</sup>|236.7 <sup>***</sup>|1786.2 <sup>***</sup>|215.4 <sup>***</sup>|222.7 <sup>***</sup>|222.2 <sup>***</sup>|1943.7 <sup>***</sup>|233.9 <sup>***</sup>|215.4 <sup>***</sup>|220.2 <sup>***</sup>|212.1 <sup>***</sup>|
|Price equation|173.5 <sup>***</sup>|191.2 <sup>***</sup>|167.3 <sup>***</sup>|197.9 <sup>***</sup>|167.8 <sup>***</sup>|192.1 <sup>***</sup>|119.5 <sup>***</sup>|158.7 <sup>***</sup>|197.9 <sup>***</sup>|175.9 <sup>***</sup>|194.1 <sup>***</sup>|

Source: Author's calculations.

1/ The dependent variable is ln _s jt_ .

2/ The constant term in the market share equation is dropped due to multicollinearity with country-specific dummy variables.

3/ The estimated price coefficient only marginally varies among models, because instrumental variables adopted are almost identical. 4/ The dependent variable is .ln _p_ * _jk_ Second, transport infrastructure is most important to promote the coffee and cocoa sectors.<sup>19</sup> This is consistent with our prior expectation; the overall road connection from farms to primary processing facilities and to major ports are the main determinant of the market performance, because coffee and cocoa are among typical high-value commodities and are exported abroad. This result is not contradictory to the existing study on another high-value agriculture commodity, beef (Iimi, 2007).

Despite our prior expectation, the impact of telecommunications infrastructure is not significant. The reason may be the measurement error problem. The telecommunications industry is rapidly developing in both quantity and quality terms; the traditional teledensity may not be able to capture such rapid development in the recent years. Recall that our lagged 19 There is no evidence to support that agriculture- or rural-related infrastructure is of particular importance in this area, though there are only a few comparable specifications, i.e., telecommunications and water infrastructure provision.