Gasoline Juba Malakal 95.3% 31.2% 32.7% Source: Authors’ calculations based on WFP data.

There have been changes in price patterns over time. For example, in the case of sorghum and wheat flour, the price gaps shifted from negative to positive. While initially prices for these two products tended to be higher in Juba than in the rest of the state capitals, as time passed, prices became relatively lower in Juba. This is likely related to a shift in production and trade structures for those products as a consequence of the imposition of trade restrictions with Sudan. Although trade data by product and origin is scarce and incomplete, evidence suggests that imports of both wheat flour and sorghum increased substantially in recent years, and the origins of these flows are Uganda (for wheat flour) and the USA (for sorghum). In both cases, these imported products enter the country through Juba, making it reasonable for their prices being lower in that point of entry. For example, the prices of sorghum in Malakal during 2009 and 2010 were lower than in Juba, but these prices increased rapidly and became volatile after the independence referendum (January 2011) remaining higher than in Juba for the following two years. The increases in prices are likely related to transportation costs, multiple check points, roadblocks and payments of several formal and informal taxes.<sup>12</sup> How did the border closure of August 2011 affect spatial price differences across the country? Are there identifiable differences for states in the north? We look at the effect of the border closure on price differences and its differential impact on northern states by product. Results are presented in Table 2.<sup>13</sup> The absolute values of price differences of a given product in a given city with respect to Juba are greater after the border closure, suggesting that the trade restrictions increased segmentation. For the cases of groundnuts, maize, sorghum and wheat flour, these differences are statistically significant. In addition, price differences with Juba appear higher in northern states than in southern states (which is likely attributable to higher geographical distance). Only for sorghum, however, the effects of border closure on price differences are significantly different for cities in northern states (Wau, Aweil, Kajok, Bentiu and Malakal). Results suggest that in this case, price differences actually fell, in absolute value, with respect to Juba. This is likely related to a change in the direction of trade for this product, and it is consistent with the change in the sign of price changes for this product. While before the border closure Sorghum was typically more expensive in Juba, after the border closure, the disruption of trade with Sudan, increased the price of Sorghum – and in particular in northern regions (see Cali and Varela (2013)), bringing it closer to levels observed in Juba.

Table 2: Price Differences: Before and After the Border Closure, For Northern and Southern <u>States</u>

|Price differences|Broad<br>Beans|Groundnuts|Maize|Millet|Sesame|Sorghum|Wheat<br>Flour|
|---|---|---|---|---|---|---|---|
|_Border Closure_|0.0292|0.108**|0.0989**|0.00443|0.0483|0.0973***|0.0995**|
||(0.06)|(0.05)|(0.05)|(0.06)|(0.06)|(0.03)|(0.05)|

> 12 The analysis in WFP (2013) presents analogous results to ours.

> 13 Methodologically, this analysis consists in a tabulation of price differences across two periods (pre and post border closure), and two regions (northern states, and the rest), through the inclusion of a border closure step dummy, a region dummy and its interaction.

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