Market integration via entrepôt: Southeast Asia's rice trade, 1828–1870

Abstract

ABSTRACT While scholars have disclosed the pre-1870 intercontinental market integration between Europe and Asia, the contemporaneous intra-Asian international market has been assumed fragmentary. Contrary to this prevailing view, this study demonstrates that Southeast Asia's international rice market was in a process of integration from the 1830s onwards, with a dynamic shift in market linkages and efficiency via Singapore. Specifically, an estimation of coefficient of variation demonstrates long-run price convergence in Java, Singapore, and Southern China from the 1830s until 1872. Moreover, according to temporal variations of transaction costs and adjustment speed estimated using a Threshold Autoregressive model, direct market integration between Java and China shifted to indirect integration based on Singapore's intermediary function after the mid-1840s; market efficiency steadily improved through speedier information transmission while adapting to changing market linkages. This study suggests that rather than Western-led trade liberalizations, Singapore's entrepôt function significantly contributed to the post-1830s progress of Southeast Asia's rice market integration.