The Determinants of Export of Primary Commodities in Sub Saharan Africa: A Panel Co - Integration Approach

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SSA is generally characterized by a heavy dependence on export of primary commodities. Export income is the largest resource inflows in the region. However, the performance of the exports of primary commodities is devastating. And this is a source of shock to the economy due to the volatility & continuous decline of the prices of their exports. Both internal and external factors are responsible for the poor performance of the sector. The study employed panel data to empirically analyze these determinants in SSA for the period 1990-2008 using a panel co- integration approach. A sample of 25, 15, 19 and 15 countries from the region were taken to analyze the determinants of exports of food, agricultural raw material s, minerals and energy (as defined under the SITC) respectively. For the first three commodity groups the real value of exports is specified in a semi-log linear form as a function of the relative export price (unit export price of a commodity per its world price), the international value of a commodity relative to its domestic value, the weighted average income of importers, real effective exchange rates, world interest rate, gross domestic investment and foreign direct investment. On the other hand, the real value of export of energy is specified in a log linear form as a function of world export price of energy relative to world prices and gross world income (with the assumption of constant supplies). The long run relationships were estimated using OOLS which accounts for serial correlations and problem of endogeneity. The results demonstrated the inastic nature of the elastic ties of exports of the three commodity groups while elastic price (relative) and income elastic ties were found for energy exports. Moreover, the supply side factors and the macroeconomic policies pursued by importers are found to be among the important determinants of exports of primary commodities in SSA.



Commodities in Sub Saharan, The Determinants of Export of Primary Africa