Africa's Exports Research Articles

Relaxing Export Supply Capacity Constraints and Promoting Export Expansion and Diversification in Africa: The Role of Special Export Development Strategies

Abstract: This paper examines the role of several export development strategies in relaxing export supply capacity constraints and promoting export expansion and diversification in Africa. It starts with a review of the analysis and recommendations in Can Africa Claim the 21st Century? (World Bank, 2000) and an identification of subsisting supply obstacles. This forms the background against which the paper discusses changes in the growth, structure and destination of African exports during 2000–2005; explores the use of export development strategies (such as supply chain management, networks and clusters, as well as branding); and discusses the enhancement of market access of African exports regionally and globally. The paper concludes with an analysis of the prospects for relaxing Africa's export supply response capacity constraints and the feasibility/viability of the suggested strategies for expanding and diversifying the region's exports.

Real Exchange Rate Volatility And Its Effect On Trade Flows: New Evidence From South Africa

This paper empirically re-examines the impact of real exchange rate volatility on South Africa's export flows to the United States for the period 1992:1 - 2004:4, using the two-country model of international trade. The exponential generalised autoregressive conditional heteroscedasticity (EGARCH) model is used to measure real exchange rate volatility. Cointegration and error- correction models are used to obtain the estimates of the cointegrating relations and the short-run dynamics, respectively. Further, variance decomposition analysis is used to show the dynamic adjustments of real exports to shocks in the fundamentals and the proportion thereof. The results obtained in this paper summarily provide evidence that real exchange rate volatility has a negative effect on real exports.

SOUTH AFRICA'S EXPORT PERFORMANCE: DETERMINANTS OF EXPORT SUPPLY

AbstractThis paper presents both a comparative analysis of South Africa's export structure and performance and an econometric investigation of the determinants of export volumes. The paper finds that the improved growth and diversification of South African manufactured exports during the 1990s lag those of East Asia and a few other resource‐based economies. This performance in part reflects relatively low world growth in resource‐based products, but factors that affect the profitability of export supply, such as the real effective exchange rate, infrastructure costs, tariff rates and skilled labour, are also shown to be important. Export demand and the ability to compete in the export market on the basis of price are not found to be a major constraint to export growth.

South Africa's Export Predicament

This paper explores export performance in South Africa over the past 50 years, and concludes that a lagging process of structural transformation is part of the explanation for stagnant exports per capita. Slow structural transformation in South Africa is found to be a consequence of the peripheral nature of South Africa’s productive capabilities. We apply new tools to evaluate South Africa’s future prospects for structural transformation, as well as to explore the sectoral priorities of the DTI’s draft industrial strategy. We then discuss policy conclusions, advocating an ‘open-architecture’ industrial policy where the methods applied herein are but one tool to screen private sector requests for sector-specific coordination and public goods. [Jointly published as Center for International Development Working Paper No. 129 and KSG Faculty Research Working Paper Series RWP06-040.]

Are genetically modified (GM) crops a commercial risk for Africa?

What risks might Africa face if it decided to plant genetically modified (GM) agricultural crops? A rough calculation based on current export profiles for one sampling of eastern and southern African countries suggests that the commercial export risks incurred outside of Africa would be quite small. Most of Africa's exports of goods that might be considered GM currently go to other African countries, rather than to Europe, Asia, or some other GM-sensitive destination. This raises a trade policy coordination challenge for Africa, but only a small commercial export risk beyond Africa.

EXPORT DIVERSIFICATION AND INTRA-INDUSTRY TRADE IN SOUTH AFRICA

This paper uses cumulative export experience functions to explore the structural dynamics of South Africa's exports for the period 1990–2003. It finds a large spread of emerging non-traditional accelerating export products across industry clusters of different factor intensities, steadily increasing their proportion in total exports and her main markets. Shift-share and correlation analyses show that increased intra-industry specialisation and trade within import competing product groups explain the structural change in the direction of export diversity. With respect to quality, as measured by relative unit prices of exports and imports in intra-industry trade with the EU and the US, a relative improvement of export quality is found.

Why Don't African Manufacturing Enterprises Export More? The Role of Trade Policy, Infrastructure Quality and Enterprise Characteristics

There has been much concern about Africa's recent export performance. Africa's share of world exports has declined and most countries are highly dependent upon a narrow range of primary commodities for export earnings. This article looks at factors that affect the export performance of manufacturing enterprises in eight African countries. In addition to enterprise characteristics (e.g., size, ownership and education of the manager), policy-related variables also affect export performance. Manufacturing enterprises are less likely to export in countries with restrictive trade and customs regulation and poor customs administration. The quality of domestic transportation infrastructure also appears to affect export performance, although the coefficient on this variable is statistically insignificant.

The Africa Growth and Opportunity Act and its Rules of Origin: Generosity Undermined?

This paper describes the United States recently enacted Africa Growth and Opportunity Act (AGOA) and assesses its quantitative impact on African exports. The AGOA expands the scope of preferential access of Africa's exports to the United States in key areas such as clothing. However, its medium‐term benefits – estimated at about US$100‐$140 million, an 8−11 per cent addition to current non‐oil exports – would have been nearly five times greater (US$540 million) if no restrictive conditions had been imposed on the terms of market access. The most important of these conditions are the rules of origin with which African exporters of clothing must comply to benefit from duty‐free access.

Enhancing Sub-Saharan Africa's Export Performance: Challenges, Opportunities, and Implications

This paper extends the discussion of intra- and ex-tra-sub-Saharan Africa's export performance. It starts with commodity-wise and destination-wise analyses and explores the public policy challenges and opportunities. In the spirit of stimulating further discussion, specific public policy suggestions are offered to improve sub-Saha-ran Africa's overall export performance. The paper concludes with some remarks and implications about the region's export performance and directions for future research.

The Africa Growth and Opportunity Act and its Rules of Origin: Generosity Undermined?

This paper describes the United States recently enacted Africa Growth and Opportunity Act (AGOA) and assesses its quantitative impact on African exports. The AGOA expands the scope of preferential access of Africa's exports to the United States in key areas such as clothing. However, its medium term benefits estimated at about US$100-$140 million, an 8 11 percent addition to current non-oil exports would have been nearly five times greater (US$540 million) if no restrictive conditions had been imposed on the terms of market access. The most important of these conditions are the rules of origin with which African exporters of clothing must comply to benefit from duty-free access.

Africa's export structure in a comparative perspective

Cross-country econometric analysis informed by Heckscher-Ohlin trade theory suggests that the concentration of Africa’s exports on unprocessed primary products is caused largely by the region’s combination of low levels of education and abundant natural resources. In some African countries, the share of manufactures in exports could be raised by improving infrastructure and policies. For most of Africa, however, the highest priority is to raise the absolute level of exports in all sectors, and particularly in sectors based on natural resources, following a development path more like that of land-abundant America than that of land-scarce Asia.

External aid: help or hindrance to export orientation in Africa?

The central proposition of this paper is that African countries should start thinking through undertaking an orderly transition from the current high dependence on foreign for financing economic and social development. Aid dependency should be reduced not because the international development community believes it will eventually happen, but because such dependence on foreign could substantially impair Africa's export competitiveness and therefore derail the Continent export-oriented development strategies. A combination of further debt relief, reforms of the current regime and enhanced policy environment should allow a managed transition to a mixed menu of official development assistance (ODA) and private capital flows. However, the attempt by Africa to increase its share of investments from international private capital markets should be firmly anchored to the basic tenets of an export-based development strategy. To provide the basis for these policy conclusions, I estimate the relationship between ODA, real exchange rates (RER) and non-traditional exports for a panel of 62 developing countries, including 28 from Africa. Unsustainable ODA flows were shown to have caused substantial partial RER overvaluation in many African and non-African countries. Moreover, exceptionally high aid-dependent African countries have either experienced, or are likely to experience, overall RER overvaluation. Conditional on absence of RER overvaluation--a proxy for good policy environment of relevance to export performance--a robust Laffer curve-type relationship exists between and non-traditional exports through the misalignment of RER relative to its equilibrium. The Laffer curve relationship justifies a precise concept of dependency, based on the extent to which excessive ODA flows exceeded the threshold beyond which more ODA actually hinders rather than helps export expansion. According to this concept, several African countries were characterised as being aid dependent. Copyright 1999 by Oxford University Press.

Africa's Export Structure in a Comparative Perspective

Cross-country econometric analysis informed by Heckscher-Ohlin theory suggests that the concentration of Africa's exports on unprocessed primary products is caused largely by the region's combination of low levels of education and abundant natural resources. One-third of the countries in Africa have considerable potential to export manufactures, much of it unrealised at present, but even in the future, with more education, improved infrastructure and better policies, the share of manufactures in exports will remain far lower in Africa than in Asia, which has fewer natural resources. The way forward for Africa in the medium term lies mainly in raising the level of its primary exports, processed and unprocessed, following a long-term development path more like that of natural-resource-abundant America than that of natural-resource-scarce Asia.

THE ECONOMIC ENVIRONMENT AS DETERMINANT OF FEASIBLE AGRICULTURAL GROWTH AND DEVELOPMENT IN SOUTH AFRICA (NIE PUBLISEERBAAR NIE) / DIE EKONOMIESE OMGEWING AS DETERMINANT VAN HAALBARE LANDBOUGROEI EN -ONTWIKKELING IN SUID-AFRIKA

Liberalised markets and an open international trading environment are necessary for agricultural growth and exports in Africa. South Africa is no exception, and this paper argues that the country's current macro-economic strategy, the Growth, Employment and Redistribution (GEAR) strategy, will, with its emphasis on an open and market-facilitating economic environment support agricultural growth and exports. Although GEAR does not deal explicitly with agriculture, it is shown that agricultural growth of at least 2.2% per annum on average is needed to achieve GEAR's aggregate economic growth targets. Micro-level reform and assistance to small-scale farmers are needed for rural areas to adjust and benefit from trade liberalisation, while beyond GEAR a plea is made for an emphasis on agro-industries.

Effective Sanctions on South Africa: The Cutting Edge of Economic Intervention

The role of international sanctions against South Africa, George W.Shepherd Jr multilateral sanctions against South Africa - a legal framework for comprehensive implementation, Ved P.Nanda multiplier and structural path analysis of trade sanctions, Haider Ali Khan South Africa's strategic mineral exports - an analysis of the feasibility of a United States embargo, Sanford Wright economic pressure on South Africa - does it work?, Stephen P.Davis the anti-apartheid movement and international sanctions, George W.Shepherd Jr. Appendices, Timothy U.Mozia: chronology of arms embargoes against South Africa chronology of economic embargoes against South Africa sanctions bursting strategies.

THE PRICE OF MONEY FRANCE AND STRUCTURAL ADJUSTMENT IN FRANCOPHONE AFRICA

Since the early eighties, Africa's precarious economic equilibrium has been broken. The continent is in permanent crisis, a crisis which gives every indication of worsening yet further in the nineties. Population increases are consistently among the highest in the world and usually outstrip economic growth. Food production has fallen over the last decade and continues to fall. The terms of trade of Africa's major exports have been eroded and they continue to be eroded. The future appears bleak. Is such pessimism justified or are we misinterpreting Africa's 'crisis'? The outward symbol of Africa's economic fate is the structural adjustment programme, that is the IMF/World Bank package under which African countries are entitled to credit. There has been much debate on the philosophy, validity and viability of the adjustment programmes and on their economic, social and political consequences. The World Bank and the IMF have claimed good results in terms of agricultural production and economic growth. Critics, on the other hand, argue that structural adjustment cannot offer long term solutions to Africa's economic problems because it locks them into a vicious circle of tighter dependency. How do we assess the impact of structural adjustment programmes? In Africa, the Franc Zone countries (where the currency, the CFA Franc, is tied to the French Franc) have traditionally been seen to be economically better offthan those African countries with inconvertible currencies because their economies were artificially protected by the Franc. Is this perception accurate? To what extent and in which ways has the economic crisis of the eighties impinged on the Franc Zone countries. Is the Franc Zone still appropriate today or should it be scrapped? The first point to be made is that the France Zone has remained popular with its member states. Although Mauritania, Mali, Guinea and Madagascar left for specific internal political reasons, Mali and Guinea have now rejoined and Madagascar might consider re-entering. The Comoro Islands and Equatorial Guinea, a former Spanish colony, are now members and several other countries, among which Guinea-Bissau and Sao Tome &

A third port for Southwest Africa/Namibia?1)

The end of South African control over its former Southwest Africa Mandate and the imminent emergence of an independent Namibia provide opportunity for reorientation of South-Central Africa's export metal trade. How rapid this may occur will depend in some measure upon the political and commercial environment still to evolve in the Walvis Bay exclave. This, in turn, may be related to the future treatment of Namibia's critically placed white minority and to the political rhetoric of a SWAPO government. Any reorientation of the region's export trade will place the strategic CapriviStrip in a new geopolitical perspective, one better resembling that which Imperial Germany had in mind for this sliver of land than had evolved during 75 years of South African rule. Expansion of trade through the Caprivi Corridor should stimulate transportation development in NE Namibia. Were the Walvis Bay situation not to be resolved in a manner conducive to its future use by an independent Namibia or by neighboring states, then pressure to build a new deep water port will accelerate. The strategically placed fishing industry and the use of these waters by large foreign trawler fleets might be the stimuli for the initial financing of the construction of any new port. Luederitz, the country's “true port,” is inadequate to the task of modern commerce and is located too far from the economic and population core of the country.

Marketing West Africa's Export Crops: Modern Boards and Colonial Trading Companies

The establishment of marketing boards in British West Africa in the 1940s was heralded at the time as a drastic, perhaps revolutionary change in the produce trade. The political implications were undoubtedly great: public enterprise (the marketing boards) had replaced private enterprise (a number of trading companies), and the ongoing debate on their relative merits made a colourful excursion to West Africa in the 1950s because this region offered a clear-cut case for comparison.1 The differences between the organisations were thus inevitably highlighted.

Agricultural Policy in Tropical Africa: is a Turnaround Possible?

AbstractThe food crisis in Africa has entered our living rooms through television and the press. Why is per capita agricultural production lower now than at independence in the early 1960s? This article examines the factors responsible and outlines some solutions. Both external and internal factors have converged to create the crisis ‐ low prices to farmers to placate vocal urban consumers, inefficient, high‐cost marketing boards, governments' neglect of agriculture in favor of industry, over‐valued exchange rates, lack of foreign exchange and increasing debt burdens. Externally the depressed world market decreased demand for Africa's exports and contributed to the stagnation of the economics. Drought, a population growth rate approaching 3%/year and a shortage of human capital added to the crisis.

Agricultural policy in tropical Africa: is a turnaround possible?

The food crisis in Africa has entered our living rooms through television and the press. Why is per capita agricultural production lower now than at independence in the early 1960s? This article examines the factors responsible and outlines some solutions. Both external and internal factors have converged to create the crisis — low prices to farmers to placate vocal urban consumers, inefficient, high-cost marketing boards, governments' neglect of agriculture in favor of industry, over-valued exchange rates, lack of foreign exchange and increasing debt burdens. Externally the depressed world market decreased demand for Africa's exports and contributed to the stagnation of the economics. Drought, a population growth rate approaching 3%/year and a shortage of human capital added to the crisis.