Abstract
This study investigates the determinants of growth and competitiveness of Zambia’s flower exports to three main export destinations—the Netherlands, the UK and Germany—using annual time series data from 1990 to 2010. Acknowledging that time series data are often nonstationary, leading to misleading economic analyses, the study employs cointegration and error correction models to establish factors of conditions growth and competitiveness of Zambia’s flower exports. The results show that supply and competitiveness of flower exports are positively influenced by domestic flower production, real GDP and population of importing countries, relative depreciation of domestic currency and world export prices. In contrast, exports from competing countries and real interest rates were found to negatively influence flower exports. This seems to suggest that monetary policies and exchange rate regimes that promote trade are required for enhancing and fostering an environment favorable for flower production and exporting. In addition, the replacement of Zambia’s flower exports by those from other countries dictates that there must be a quality improvement so the country’s exports can compete favorably with those from other countries.
Highlights
Like many African countries’ economies, Zambia’s economy has continued to be predominantly agriculture based
The results show that of the 23 variables tested for integration, only flower exports to the Netherlands, flower exports to the UK, flower exports to Germany, population of the Netherlands and Germany, flower production, lagged flower production, export credit, interest and exchange rates, and the domestic resource cost (DRC) of flower exports were stationary in their original levels at 5 percent significance level
All the series, with the exception of those that were found stationary in their original level form, have two Augmented Dickey-Fuller (ADF) test statistics, one when in nonstationary original form ADFt0, and the other after at taining stationarity following differencing ADFtd
Summary
Like many African countries’ economies, Zambia’s economy has continued to be predominantly agriculture based. The sector mainly consists of smallholder farmers who make up about 52 percent of the country’s farmers and contribute about 80 percent of the nation’s staple food, maize [4,5,6]. Despite their aggregate contribution to the nation’s staple food supply and gross domestic product (GDP), smallholder farmers still account for over a third of the nation’s hungry and poor [7]. Zambia’s total agricultural production largely consists of cereals, high value agricultural exports make a significant contribution of 40 percent annually to total agricultural output [12].
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