EFFECTS OF EXCHANGE RATE MOVEMENTS ON EXPORT OF SOME SELECTED AGRICULTURAL PRODUCTS IN EMERGING AFRICAN COUNTRIES

  • E. A. OLUBIYI Department of Economics, College of Management Science, Federal University of Agriculture Abeokuta
  • F. KOLADE Department of Agricultural Economics, Federal University of Agriculture Abeokuta
  • D. A. DAIRO Department of Economics, College of Management Science, Federal University of Agriculture Abeokuta
Keywords: Exchange rate, agriculture exports, Autoregressive Distributed Lag

Abstract

This study investigates the effect of exchange rate movement on export of five selected agricultural products, in five emerging countries in Africa. Autoregressive Distributed Lag (ARDL) method was employed to analyse the data spanning 1995 to 2015. It was found that, in the short run, exchange rate has a mixed effect on the product across countries, that is, in some products and countries, exchange rate affects export positively, while in some countries and product exchange rate movement has a negative effect on export.  Further, exchange rate does not have long run effect on sugar and fruits and nuts in most of the countries.  Consequently, it is recommended that government, in countries where exchange rate depreciation increases export, should maintain depreciation. Further, there should be provision of adequate infrastructure that will enhance agricultural production.   In the same vein, interest rate on loans given to farmers should be minimal, so as to encourage borrowing to finance agricultural production.  This recommendation is mostly relevant to countries where interest rate affects export negatively.

 

 

References

Adekunle, W., Udukwe, I. 2018. The impact of exchange rate dynamics on agricultural output performance in Nigeria. MPRA Paper No. 87750. Available at https://mpra.ub.uni-muenchen.de/id/eprint/87750.

Aktas, A., Kaplan, F., Ozkan, B., Bundfield, R. 2015. Effect of exchange rate uncertainty on agricultural exports: a study of Turkey. Business Management Dynamics 4(8): 1-8.

Ali, S. 2017. Exchange rate effects on agricultural exports: firm-level evidence from Pakistan. Global, productivity and technology research Paper 2017/09. Available at https://www.nottingham.ac.uk/gep/documents/papers/2017/2017-09.pdf.

Arcand, J.L., Guillaumont, P., Guillaumont, S.J., 2008. Deforestation and the Real Exchange Rate. Journal of Development Economics 86: 242–262.

Chamunorwa, W., Choga, I. 2015. Exchange Rate Volatility and Export Performance in South Africa. Asian Economic and Financial Review 5(10).

Chi, J., Cheng, S. 2016. Do Exchange Rate Volatility and Income Affect Australia’s Maritime Export Flows to Asia. Transport Policy 47: 13–21.

FAOSTAT 2018. Statistical Pocketbook. Food and Agriculture Organization of the United Nations.

Genc, E., Kibritci, O. 2014. The Effects of Exchange Rates on Exports and Imports of Emerging Countries. European Scientific Journal 10(13): 1857 – 7881.

Hsu, W., Lu, Y., Zhou, Y. 2014. Exchange rates and export structure. 1-33. Research Collection School of Economics. Available at https://ink.library.smu.edu.sg/soe_research/1721.

IMF 2018. Sub-Saharan Africa Capital flows and the future work: Background Paper-online annexes. Regional Economic Outlook, IMF, Washington DC.

Innocent, S. 2014. The Impact of Exchange Rate Expectations and Interest Rate Differentials on Trade in South Africa: An Econometric Analysis. Mediterranean Journal of Social Sciences 5(2) ISSN 2039-9340.

Lerner, A. 1944. The Economics of Control Principles and Welfare Economics. London, Macmillan.

Li, H., Ma, H., Xu, Y. 2015. How do exchange rate movements affect Chinese exports? A firm-level investigation. Journal of International Economics 97(1).

Malik, A., Hassan, R., Shah, S., Ghafoor, A. 2016. Capturing effect of exchange rates on exports: (a case of developing economy). Journal of Humanities and Social Sciences 6(3): 112-122.
Marshall, A. 1923. Money, Credit and Commerce, London, Macmillan.

Najia, S., Irfan S., 2012. Exchange Rate Volatility and its Effect on Pakistan’s Export Volume. Advances in Management & Applied Economics 2(4): 109-124.

Obayelu, E., Salau, A. Agricultural Response to Prices and Exchange Rate in Nigeria: Application of Co-integration and Vector Error Correction Model (VECM). Department of Agricultural Economics and Farm Management, University of Agriculture Abeokuta (UNAAB), Ogun State Nigeria, 1(2): 73-81.

Obinwata, I., Owuru, J., Farayibi, A. 2016. Exchange rate trends and export performance in Nigeria. A descriptive approach. MPRA Paper Non 75526.

Ramesh, C., Paudel, P., Burke, J. 2015. Exchange Rate Policy and Export Performance in a Landlocked Developing Country: The case of Nepal. Journal of Asian Economics 38: 55–63.

Reboredo, J.C., Ugando, M. (2014), US Dollar Exchange Rate and Food Price Dependence: Implications for Portfolio Risk Management. North American Journal of Economics and Finance (2014), http://dx.doi.org/10.1016/j.najef.2014.08.005.

Ronald A.B., Fred, J., Ruppel, D. Bessler, A. 1995. U.S. Corn Exports: the Role of the Exchange Rate. Agricultural Economics 13: 75-88.

Sanderson, L. 2009. Exchange Rates and Export Performance: Evidence from Micro-Data Reserve Bank of New Zealand: Bulletin, 72(2).

Shotar, M., El-Mefleh, A. 2009. Economic Exposure to Exchange Rates in Jordan Companies: Theoretical Framework and Literature Review. Journal of Applied Econometrics and International Development 9(1).

Smith, M. Impact of the Exchange Rate on Export. Reserve Bank of New Zealand: Bulletin, 67(1).

Tamar, R. 2016. Impact of the 2015 U.S. Dollar Rise on Export Prices and on the Agricultural Industry. Beyond the Numbers: Global Economy 5(18).
Wanhui J. 2014. The Effect of RMB Exchange Rate Volatility on Import and Export Trade in China. International Journal of Academic Research in Business and Social Sciences 4(1).

Wondemu, K., Potts, D. 2016. The Impact of the Real Exchange Rate Changes on Export Performance in Tanzania and Ethiopia. Working Paper Series No.240, African Development Bank, Abidjan, Côte d’Ivoire.

World Bank 2019. World Integrated Trade Solutions. The World Bank Group.
Published
2020-11-06
Section
Articles