Exporting Processed Food: Sri Lanka’s Experience in the Asian Context

In recent decades, there has been a palpable shift in the commodity composition of world agri-food trade away from the traditional (unprocessed) primary products towards processed food. This structural change in trade patterns and its policy implications have so far received scant attention in policymaking in most agricultural resource-rich developing countries. This article aims to draw attention to this oversight by examining the experience of Sri Lanka against the backdrop of the experiences in agri-food trade of other countries in the Asian region. The analysis uses a new dataset that systematically delineates processed food from the traditional primary good products. The analytical narrative of an inter-country pattern of export performance shows that, unlike primary commodity dependence, exporting processed food is positively associated with the stage of economic advancement of countries. The econometric analysis suggests that export success is determined by a combination of growth of world demand, the domestic agricultural resource endowment and the conduciveness of the policy regime for global economic integration.