The impact of currency devaluation on non-oil exports in Africa
DOI:
https://doi.org/10.29015/cerem.954Słowa kluczowe:
exchange rate devaluation, relative prices, foreign capital, panel ARDL, African countriesAbstrakt
Aim: This study assesses how devaluation in official exchange rate and change in relative prices influenced non-oil export in African countries for the period of 30 years (1991-2020) in 11 African countries (Nigeria, Burkina Faso, Burundi, Eswatini, Mauritius, Mozambique, Niger, Rwanda, Sierra Leone, Tanzania and Uganda).
Design/Research methods: This study utilized different estimators namely Mean Group, Pooled Mean Group as well as dynamic panel GMM methods. The major advantage of the MG estimator is that it is reliably efficient even in presence of weak cross-sectional dependence of the errors by estimating separate regressions to calculate coefficient means. Moreover, it applicability knows no bounds even when estimator for each individual country is weakly cross correlated. With a PMG estimator, a large scale individual panel heterogeneity in short-run responses is accommodated given homogenous long-run relations across countries.
Findings: The results of the panel co-integration suggest a long-run equilibrating relation amongst the variables in the study. This was validated on the basis of absolute t-value of 5.0781under the t-bound. Our results for both MG and PMG estimators show significant negative devaluation and relative prices effects on non-oil exports in 11 African countries. The dynamic panel GMM results are robust and in agreement with the estimates of MG and PMG. From the results of cross-sectional analysis by country, results for countries revealed exchange rate devaluation had negative and significant impact on non-oil exports. Consequently, depreciation of the exchange rate has a short-run adverse effect on non-oil export due to high inelastic import dependence. Similarly, with exemption of Rwanda, and South Africa, the relative price effect was negatively significant for every other country in the study.
Originality: The originality is based on fact that the paper establishes both static and dynamic responses of non-oil export to devaluation in official exchange rate, relative prices, and foreign capital from trading partners in 11 African countries.
Limitations: It would be desirable to study 30 countries in Africa. We could not proceed with all countries due to inaccessibility of relevant data. Hence, caution should be taken in generalizing our findings.
Key word: exchange rate devaluation, relative prices, foreign capital, panel ARDL, African countries
JEL: C33, F13, F21
Bibliografia
Aliyu S.U.R. (2008), Exchange rate volatility and export trade in Nigeria. An empirical investigation, MPRA Paper No. 13490, http://mpra.ub.uni-muenchen.de/13490/ [15.12.2022].
Anthony L., Somiara E. (2010), The impact of macroeconomic variables on non-oil export performance in Nigerian, from 1986–2010, “Journal of International Development and Cooperation”, vol. 17, no. 2, pp. 53–73.
Balogun E.D (2007), Exchange rate policy and export performance of WAMZ countries, http/://mpra.ub.uni-muenchen.de/6233 [15.12.2022].
Bergen G. (2017), Monetary policy and the volatility of the real exchange rate, McGraw Hill Companies New Zealand.
Broda D., Romails I. (2003), The effect of exchange rate devaluation on the economic growth of countries in Africa, “European Journal of Business and Management”, vol. 10 no. 18, pp. 1–10.
Carbaugh R. (2004), International economics, Thomson, Ohio.
Dania E.N., Ogedengbe F.A. (2019), Impact of exchange rate volatility on non-oil export performance in Nigeria, “Open Journal of Economics and Commerce”, vol. 2 no. 1, pp. 32–39.
Dunn R.M., Mutti J.H. (2004), International economics, 6th ed., Routledge, London.
Efobi H., Osabuohien E. (2010), The promotion of non-oil export in Nigeria, “Journal of Economics”, vol. 2 no. 2, pp. 115–120.
Ekperiware O.M. (2009), Agricultural sector performance and Nigeria’s economic growth, “Asian Journal of Agricultural Extension, Economics & Sociology”, vol. 15 no. 1, pp. 1–13.
Enoma A., Isedu M. (2009), The impact of financial sector reforms on non-oil export in Nigeria, “Journal of Economics”, vol. 2 no. 2, pp. 115–120.
Ewetan M., Olabanji G., Adebisi, I., Ese, P., Emmanuel R. (2017), The relationship between agricultural output and economic growth in Nigeria, “European Journal of Business and Management”, vol. 10 no. 18, pp. 1–10.
Ezike A., Ogege I. (2012), Nigeria foreign trade policy and its impact on non-oil export, “Journal of International Development and Cooperation”, vol. 17, no. 2, pp. 53–73.
Hasanov F. (2012), The impact of the real exchange rate on non-oil exports. Is there an asymmetric adjustment towards the equilibrium?, MPRA Paper No. 43728, University Library of Munich, Munich.
Hoag A.J., Hoag J.H. (2006), Trade without money. Introductory economics, 4th ed., World Scientific Publishing Co. Pte. Ltd., Singapore.
Igwe H., Edeh C., Ukpere K. (2015), Impact of non-oil sector on economic growth. A managerial economic perspective, “Problems and Perspective in Management”, vol. 13 no. 2, pp. 170–182.
Jones R.W. (2008), Heckscher-Ohlin trade flows. A re-appraisal, “Trade and Development Review”, vol. 1 no. 1, pp. 1–6.
Khan M.A. (2007), Trade liberalization, financial development, and economic growth, Pakistan Institute of Development Economics Working Paper.
Kolawole B.O. (2013), Foreign assistance and economic growth in Nigeria. The two-gap model framework, “American International Journal of Contemporary Research”, vol. 3 no. 10, pp. 40–56.
Kolawole O., Okodua R. (2010), Foreign direct investment, non-oil exports and economic growth in Nigeria using granger causality test, “Journal of International Development and Cooperation”, vol.17 no. 2, pp. 53–73.
McKenzie M.D., Brooks R. (2017), The impact of exchange rate volatility on German-US trade flows, “Journal of International Financial Markets, Institutions and Money”, vol. 7, pp. 73–87.
Mordi K.S. (2006), Exchange rate management and economic growth. An FMOLS approach, Munich Personal RePEc Archive (MPRA) Paper No. 93125, https://mpra.ub.uni-muenchen.de/93125/1/MPRA_paper_93125.pdf [15.12.2022].
Muhammed O.H. (2004), Non-oil export growth and economic development in Saudi Arabia (1970–2003), “OIDA International Journal of Sustainable Development”, vol. 1 no. 1, pp. 84–86.
Ramzan I., Kiani A.K. (2012), Analyzing the relationship between FDI, trade openness and real output growth. An ECM application for Pakistan, “International Journal of Basic and Applied Science”, vol. 1 no 2, pp. 24–59.
Rasulbakshi O., Mohseni P. (2010), The effect of non-oil export on economic growth in Iran using a Computable General Equilibrium (CGE) model, “Journal of International Development and Cooperation”, vol. 17 no. 2, pp. 53–73.
Samad A. (2011), Exploring exports and economic growth causality in Algeria, “Journal of Economic and Behavioral Studies”, vol. 2 no. 3, pp. 92–96.
Shah S.W.A., Abrarulhaq M., Farooq R.M.A. (2015), Agricultural export and economic growth. A case study of Pakistan, “Public Policy and Administration Research”, vol. 5 no. 8, pp. 88–96.
Umoru D., Eboreime M.I. (2013a), The J-curve hypothesis and the Nigerian oil sector. The ARDL BOUNDS testing approach, “European Scientific Journal”, vol. 9 no. 4, pp. 314–332.
Umoru D. (2022), Devaluation of Naira, shocks, and realities. Evidence disciplining strength, 4th inaugural lecture of Edo State University Uzairue, Nigeria, May 11.
Umoru D., Amedu M. (2022), How do variations in dollar exchange rate impact food commodity prices in selected African countries?, “Central European Review of Economics and Management”, vol. 6 no. 3, pp. 47–68.
WTO (2020), Word Trade Statistical Review 2020, https://www.wto.org/english/res_e/statis_e/wts2020_e/wts20_toc_e.htm [15.12.2022].
Pobrania
Opublikowane
Numer
Dział
Licencja
Autor przenosi nieodpłatnie na Wyższą Szkołę Bankową we Wrocławiu , bez ograniczeń terytorialnych, majątkowe prawa autorskie do tego utworu w rozumieniu ustawy z dnia 4 lutego 1994 roku o prawie autorskim i prawach pokrewnych ( Dz.U. 1994, Nr 24, poz. 83 ze zm. )na zasadzie wyłączności, tj. prawo do:
a) wyłącznego używania i wykorzystania utworu w dowolnej działalności przez Wyższą Szkołę Bankową we Wrocławiu, w szczególności w działalność Biblioteki Cyfrowej uruchomionej przez Wyższą Szkołę Bankową we Wrocławiu
b) wytwarzania, utrwalania i zwielokrotniania egzemplarzy utworów wszelkimi technikami, w tym techniką drukarską, reprograficzną, zapisu magnetycznego oraz techniką cyfrową, w szczególności ich zwielokrotniania poprzez dokonywanie zapisów na płytach typu CD,
c) zamieszczenia wybranych fragmentów utworu w celach promocyjnych w publikacjach, materiałach promocyjnych, w sieci Internet oraz sieciach wewnętrznych typu Intranet Wyższej Szkoły Bankowej we Wrocławiu,
d) wprowadzania utworu do pamięci komputera Wyższej Szkoły Bankowej we Wrocławiu,
e) kopiowania i powielania utworu w technologiach fotomechanicznych lub innych znanych w dniu zawarcia umowy (fotokopie, kserokopie itp.),
f) przetworzenia dzieła na formę elektroniczną i nieograniczonego rozpowszechniania w sieci Internet.
