Growth and Competitiveness of Non-Traditional Agricultural Exports in Zambia

DOI: 10.4236/me.2013.411085   PDF   HTML     4,274 Downloads   6,464 Views   Citations

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.

Share and Cite:

C. Mwansakilwa, G. Tembo and J. Mugisha, "Growth and Competitiveness of Non-Traditional Agricultural Exports in Zambia," Modern Economy, Vol. 4 No. 11, 2013, pp. 794-808. doi: 10.4236/me.2013.411085.

Conflicts of Interest

The authors declare no conflicts of interest.

References

[1] CSO, “Agricultural and Pastoral Production Small and Medium Scale Holdings 1997-1998,” Structural Type and Post Harvest Data, Government of the Re public of Zambia, Lusaka, 2000.
[2] World Bank, “Zambia Country Report,” 2002.
[3] M. Zulu and G. Tembo, “Export Horticulture and Household Welfare: Evidence from Zambia,” In Press, Journal of Journal of Development and Agricultural Economics, 2013.
[4] C. Chipokolo, “Smallholder Agriculture: Ignored Goldmine,” PELUM Zambia, Policy Brief No. 1, 2006.
[5] A. Chapoto, D. Banda, S. Haggblade and P. Hamukwala, “Factors Affecting Poverty Dynamics in Rural Zambia,” Food Security Research Project (FSRP), 2011.
[6] T. S. Jayne, N. Mason, W. Burke, A. Shipekesa, A. Chapoto and C. Kabaghe, “Mountains of Maize, Persistent Poverty,” Food Security Research Project (FSRP), Policy Synthesis No.48, 2011.
[7] CSO, “National Postharvest Survey,” Government of the Republic of Zambia, Lusaka, 2008.
[8] D. K. Chiwele, “Agriculture Development and Food security in Sub-Saharan Africa: Building a Case for More Support: A Case Study of Zambia,” RuralNet Associates Limited, Lusaka, Zambia, 2004.
[9] USAID, “Economic Growth: Increased Private Sector Competitiveness in Agriculture and Natural Resources,” USAID/Zambia, Lusaka, 2005.
[10] OECD, “Economic Development in Zambia,” A Country Study Report, 2007.
[11] A. Sergeant and M. Sewadeh, “Current Status of Zambia’s Agricultural Exports,” Working Paper, The World Bank, 2006.
[12] MoFNP, “Zambia Poverty Reduction Strategy Paper 2002-2004,” Government of the Republic of Zambia, Lusaka, 2002.
[13] Mataa and Hichaambwa, “Video Conference on High Value Agriculture in Eastern and Southern Africa: Smallholders Involvement in Commercial Agriculture in Zambia,” 2011.
[14] ZDA, “Promoting Economic Growth and Development,” Publicity Brochure, Lusaka, 2012.
[15] Export Board of Zambia (EBZ), “Horticulture/Floriculture Sector Report,” Public Brochure, Lusaka, 2005.
[16] M. Hichaambwa, “Developments in the Horticultural supply chains in Zambia,” Food Security Research Project (FSRP), Lusaka, 2010.
[17] N. McCulloch and M. Ota, “Export Horticulture and Poverty in Kenya,” Institute of Development Studies, University of Sussex, Brighton, 2002.
[18] M. Maertens and J. F. M. Swinnen, “Trade, Standards and Poverty: Evidence from Senegal,” World Development, Vol. 37, No. 1, 2006, pp. 161-178.
http://dx.doi.org/10.1016/j.worlddev.2008.04.006
[19] V. Afari-Sefa, “The Micro-Level Distributional Effects of Horticultural Export Value Chains among Smallholders in Southern Ghana,” Research in Agricultural and Applied Economics, Vol. 2, 2008.
[20] J. E. Medina-Smith, “Is the Export-Led Growth Hypothesis Valid for Developing Countries? A Case Study of Costa Rica,” United Nations Conference on Trade and Development (UNCTAD), Policy Issues in International Trade and Commodities, (2008).
[21] D. Gbetnkom and S. A. Khan, “Determinants of Agricultural Exports: Case of Cameroon,” African Economic Research Consortium Research Paper No. 120, the African Economic Research Consortium (AERC), Nairobi, 2002.
[22] T. N. Benson, J. Minot, Pender, M. Robles and J. VonBraun, “Global Food Crises: Monitoring and Assessing Impact to Inform Policy Response,” International Food Policy Research Institute (IFPRI), Issue Brief 55, Washington DC, 2008.
[23] Zambia Export Growers Association (ZEGA), “Submissions to the National Assembly Committee on Economic Affairs on Factors Influencing the Value of the Zambian Kwacha,” 24 August 2006, pp. 3-6.
[24] Zambia Export Growers Association (ZEGA), “Submission of Recommendations to the Ministry of Commerce, Trade and Industry on the Performance of Export Horticulture Industry in Zambia,” 30 September 2011, pp. 1-4.
[25] African Agriculture, “Entry Costs in Zambian Horticultural Sector,” Public Brochure, 2007.
[26] Agrifood Standards Project, “Impact of EurepGap on SmallScale Vegetable Growers in Zambia, Fresh Perspectives,” No. 6, 2007.
[27] V. Okoruwa, G. Ogundare and S. Yusuf, “Determinants of Traditional Agricultural Exports in Nigeria: An Application of Cointegration and Correction Model,” Quarterly Journal of International Agriculture, Vol. 42, No. 4, 2003, pp. 427-438.
[28] E. Idsardi, “Determinants of Agricultural Export Growth in South Africa,” Paper Presented at the 3rd African Association of Agricultural Economists (AAAE) Conference, Cape Town, 19-23 September 2010, pp. 1-14.
[29] A. A. Hatab, E. Romstad and X. Huo, “Determinants of Egyptian Agricultural Exports: A Gravity Model Approach,” Journal of Modern Economy, Vol. 1, 2010, pp. 134-143. http://dx.doi.org/10.4236/me.2010.13015
[30] I. Adofu, M. Abula and S. I. Audu, “An Assessment of the Effects of Interest Rate Deregulation in Enhancing Agricultural Productivity in Nigeria,” Current Research Journal of Economic Theory, Vol. 2, No. 2, 2010, pp. 82--86.
[31] J. D. Amassoma, P. I. Nwosa and A. F. Ofere, “The Nexus of Interest Rate Deregulation, Lending Rate and Agricultural Productivity in Nigeria,” Current Research Journal of Economic Theory, Vol. 3, No. 2, 2011, pp. 53-61.
[32] E. O. Abolagba, N. C. Onyekwere, B. N. Agbonkpolor and H. Y. Umar, “Determinants of Agricultural Exports,” Journal of Human Ecology, Vol. 29, No. 3, 2010, pp. 181-184.
[33] L. Kasekende and M. Atingi-Ego, “Impact of Liberalization on Key Markets in Sub-Saharan Africa: The Case of Uganda,” Journal of International Development, Vol. 11, No. 3, 1999, pp. 411-436.
http://dx.doi.org/10.1002/(SICI)1099-1328(199905/06)11:3<411::AID-JID591>3.0.CO;2-1
[34] S. Prasad, “Determinants of Exports in Fiji,” Fiji Reserve Bank, Suva, 2000.
[35] N. E. Tambi, “Cointegration and Error Correlation Modelling of Agricultural Export Supply in Cameroon,” Agricultural Economics, Vol. 20, No. 1, 1999, pp. 57-67.
http://dx.doi.org/10.1016/S0169-5150(98)00068-1
[36] Z. Psaradakis, M. Sola and F. Spagnolo, “On Markov Error-Correction Models, with an Application to Stock Prices and Dividends,” Journal of Applied Econometrics, Vol. 19, 2004, No. 1, pp. 69-88.
http://dx.doi.org/10.1002/jae.729
[37] M. G. U. Khonje, “Food Inflation in Malawi: Implications for the Economy,” Master’s Thesis, Makerere University, Kampala, 2010.
[38] D. Salvatore and D. Reagle, “Theory and Problems of Statistics and Econometrics,” In: McGraw-Hill, Ed., Schaum’s Outline, 2nd Edition, McGraw-Hill Companies, Inc., New York, 2002, p. 252.
[39] A. Dlamini, D. Armstrong and T, Nxumalo, “A Cointegration Analysis of the Determinants of Inflation in Swaziland,” 2001.
[40] W. H. Greene, “Econometrics Analysis,” 4th Edition, Pearson Education, Upper Saddle River, 2003.
[41] D. N. Gujarati, “Basic Econometrics,” 5th Edition, McGraw-Hill Companies, Inc., New York, 2004.
[42] G. S. Maddala, “Introduction to Econometrics,” 3rd Edition, John Wiley & Sons Pulishers, West Sussex, Chichester, 2006.
[43] D. N. Gujarati and Sangeetha, “Basic Econometrics,” 4th Edition, Tata McGraw Hill Education Private Limited, New Delhi, 2010.
[44] T. E. Nwachukwu and F. O. Egwaikhide, “An ErrorCorrection Model of the Determinants of Private Saving in Nigeria,” A Paper Presented at the African Economic Society (AES) Conference, Cape Town, 2007.
[45] R. F. Engel and C. W. J. Granger, “Cointegration and Error Correction: Representation, Estimation and Testing,” Econometrica, Vol. 55, No. 2, 1987, pp. 215-276.
[46] D. A. Dickey and W. A. Fuller, “Likelihood Ratio Statistics for Auto-Regressive Time Series with a Unit Root” Econometrica, Vol. 49, No. 4, 1981, pp. 1057-1072.
http://dx.doi.org/10.2307/1912517
[47] S. Johansen and K. Juselius, “Maximum Likelihood Estimation and Inference on Cointegration with Applications to the Demand for Money,” Oxford Bulletin of Economic and Statistics, Vol. 52, No. 2, 1990, pp. 169-210.
http://dx.doi.org/10.1111/j.1468-0084.1990.mp52002003.x
[48] R. W. Hafer and R. G. Sheehan, “The Sensitivity of VAR Forecasts to Alternative Lag Structures,” International Journal of Forecasting, Vol. 5, No. 3, 1989, pp. 399-408.
http://dx.doi.org/10.1016/0169-2070(89)90043-5
[49] P. A. Braun and S. Mittnik, “Misspecifications in Vector Autoregressions and their Effects on Impulse Responses and Variance Decompositions,” Journal of Econometrics, Vol. 59, No. 3, 1983, pp. 319-341.
http://dx.doi.org/10.1016/0304-4076(93)90029-5
[50] O. Ozcicek and B. Rouge, “Lag Length Selection in Vector Autoregressive Models: Symmetric and Asymmetric Lags,” Journal of Applied Economics, Vol. 31, No. 4, 2010, pp. 517-524.
[51] J. D. Sargan, “Wages and Prices in the United Kingdom: A study in Econometric Methodology,” In: P. E Hart, G. Mills and J. K. Whitaker Eds., Econometric Analysis for National Economic Planning, Butterworths, London, 1964.
[52] N. Nwachukwu, A. Ifeanyi, Nnanna, N. Jude and I. George, “Competitiveness and Determinants of Cocoa Export from Nigeria,” Report and Opinion, Vol. 2, No. 7, 2010, pp. 51-54.
[53] M. Kaptui, “Does the Exchange Rate Matter for Kenya’s Exports? A Bounds Testing Approach,” A Paper Prepared for Presentation at the 2007 African Econometric Society Conference, Cape Town, 4-6 August 2007, pp. 11-19
[54] J. Von Braun and E. Kennedy, “Commercialization of Subsistence Agriculture: Income and Nutritional Effects in Developing Countries,” Working Papers on Commercialization of Agriculture and Nutrition, IFPRI, Washington DC, 1986.
[55] S. C. Mesike, “Analysis of the Determinants of Rubber Export Supply in Nigeria,” Master’s Thesis, Ibadan University, Ibadan, 2005.
[56] N. Kumar, “Multinational Enterprises, Regional Economic Integration, and Export-Platform Production in the Host Countries: An Empirical Analysis for the US and Japanese Corporations”, Weltwirtschaftliches Archiv, Vol. 134, No. 3, 1998, pp. 450-483.
http://dx.doi.org/10.1007/BF02707926
[57] M. Weber, J. Staatz, J. Holtzman, E. Crawford and R. Bersten, “Informing Food Security Decisions in Africa: Empirical Analysis and Policy Dialogue,” American Journal of Agricultural Economics, Vol. 70, No. 5, 1988, pp. 1044-1052. http://dx.doi.org/10.2307/1241733
[58] Z. Xu, Z. Guan, T. S. Jayne and R. Black, “Factors Affecting the Profitability of Fertilizer Use on Maize in Zambia,” 2009.
[59] S. Sadoulet and A. de Janvry, “Quantitative Development Policy Analysis,” The Johns Hopkins University Press, Baltimore, 1995.
[60] J. F. Fabiosa, “Assessing the Impact of the Exchange Rate and its Volatility on Canadian Pork and Live Swine Exports to the United States and Japan,” Working paper 02-WP 305, Center for Agricultural and Rural Development, Iowa State University, Ames, 2002.
[61] M. B. Kaabia and J. M. Gill, “Spanish Agricultural Exports Competitiveness: The Role of Macroeconomic Variables,” Cahiers Options Méditerranéennes, Vol. 57, No. 5, 2001, pp. 81-99.
[62] C. P. Timmer, P. F. Water and R. S. Pearson, “Food Policy Analysis,” The Johns Hopkins University Press, Baltimore, 1983.
[63] A. Enoma, “Agricultural Credit and Economic Growth in Nigeria: An Empirical Analysis,” Business and Economics Journal, Vol. 2010, 2010, Aticle ID: BEJ-14
[64] R. Balance, H. Forstner and T. Murray, “Consistency Tests of Alternative Measures of Comparative Advantage,” Review of Economics and Statistics, Vol. 69, No. 1, 1987, pp. 157-161. http://dx.doi.org/10.2307/1937915
[65] World Bank, “Ukraine Agricultural Competitiveness,” Europe and Central Asia Region, Sustainable Development Unit, 2008.
[66] E. A. Monke and S. R. Pearson, “The Policy Analysis Matrix for Agricultural Development,” Outreach Program, 1989.
[67] D. L. Debertin, “Agricultural Production Economics,” 3rd Edition, Privately Published, Macmillan Publishing Company, New York, 2004.
[68] J. M. Chizuni, “Food Policies and Food Security in Zambia,” Nordic Journal of African Studies, Vol. 3, No. 1, 1994, pp. 46-51.
[69] O. Nivievskyi, and S. von Cramon-Taubadel, “The Determinants of Dairy Farming Competitiveness in Ukraine,” Paper Presented at the 12th EAAE Congress, Gent, 27-30 August 2008, pp. 1-8
[70] K. Giannakas, R. Schoney and V. Tzouvelekas, “Technical Efficiency, Technological Change and Output Growth of Wheat Farms in Saskatchewan,” Canadian Journal of Agricultural Economics, Vol. 49, No. 2, 2001, pp. 135-152.
http://dx.doi.org/10.1111/j.1744-7976.2001.tb00295.x
[71] A. Rezitis, K. Tsiboukas and S. Tsoukalas, “Investigation of Factors Influencing the Technical Efficiency of Agricultural Producers Participating in Farm Credit Programs: The case of Greece,” Journal of Agricultural and Applied Economics, Vol. 35, No. 3, 2003, pp. 529-541.
[72] D. Hadley, “Efficiency and Productivity at the Farm Level in England and Wales 1982 to 2002,” Report for the Department for Environment, Food and Rural Affairs (DEFRA), London, 2006.

  
comments powered by Disqus

Copyright © 2020 by authors and Scientific Research Publishing Inc.

Creative Commons License

This work and the related PDF file are licensed under a Creative Commons Attribution 4.0 International License.