Exports, domestic policy and world markets: a panel study

Abstract

AbstractThis paper analyses how export growth rates in sub‐Saharan Africa are determined by both domestic and external market conditions. We highlight the problems of measuring trade orientation given the various domestically‐determined factors which influence the conditions faced by exporters. Focusing on the impact of trade policy is not a good measure of trade orientation since additional domestic policies can have an important influence on the trade orientation of a country. Hence, we select an index which incorporates the effect of trade and other policies. Then we construct an index which provides a more appropriate measure of conditions faced by exporters in the world market than previously cited measures. We find that, contrary to the recent literature, external market conditions are still critical in explaining export growth rates in sub‐Saharan Africa and should be taken into account when engaging in policy decisions. Copyright © 2001 John Wiley & Sons, Ltd.