Macroeconomic Policies and the Agricultural Sector in the Sudan, with Specific Reference to the Export Sub-Sector (1970-1995)
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Date
1996-06
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A.A.U
Abstract
This paper seeks to address the effect of government intervention on the agricultural sector
with particular reference to the export sub-sector at the aggregate and crop levels in the
Sudan. In the study 5 major export crops were examined. The intervention was analyzed
through sector specific and macroeconomic policies. From the analyses it was quite
evident that agricultural exports have been taxed directly through trade policies, export
regulations, price and market controls; and indirectly through unfavorable exchange
rates on export and import tariffs and quotas on non-agricultural goods. Exchange rate
was overvalued during the period of the study, this overvaluation has been relaxed in
recent years due to trade liberalization and flexible exchange rate system. The implicit tax
on agricultural exports is extensively more higher than the direct one.
Further analysis was done using Ordinary Least Square estimates. Most of the data were
non-stationary and the variables of interest were co-integrated and therefore, Engle Granger
methods of error correction model was used. Agricultural export share on current
GDP respond positively to the relative prices of agricultural goods, the response at crop
level is stronger than at aggregate level. Labour force has a positive effect in some cases
and negative in others. Export share adjusts with terms of trade shocks in the short-run
but inefficient policies caused disequilibrium in the long-run. The protection rates have
a negative effect on the export share, and this share was declining through time.
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Keywords
Agricultural Sector in the Sudan, Export Sub-Sector, Macroeconomic Policies