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Exchange-Rate Management and Manufactured Exports in Sub-Saharan Africa

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  • Khalid Sekkat
  • Aristomène Varoudakis

Abstract

This paper presents an overview of the evolution of exchange-rate regimes in Africa and then attempts to assess empirically the impact of exchange-rate policy on manufactured export performance on a panel of major Sub-Saharan Africa countries over the 1970-92 period. We examine the impact of three exchange-rate policy indicators: real effective exchangerate changes, real exchange-rate volatility, and (model-based measures of) real exchange-rate misalignment. Export supply functions are estimated for three manufacturing industries (textile, chemicals, and metals) and two exchange-rate regimes: a fixed rates regime including six CFA Franc countries, and a more flexible regime represented by five non-CFA countries. Our findings show that exchange-rate management matters for export performance. This is evidenced both by the significant impact of changes in the real effective exchange rate and by the negative influence exerted independently by real exchange-rate misalignment. On the ... L’évolution des régimes de change en Afrique entre 1970 et 1992 est examinée dans ce document. Les effets de la politique de change sur les exportations de produits manufacturés de l’Afrique sub-saharienne sont également examinés de manière empirique. Trois indicateurs de la politique de change sont plus particulièrement étudiés: les variations du taux de change réel effectif, la volatilité du taux de change réel et son défaut d’alignement (mesuré à partir d’un modèle). Des fonctions d’exportation ont été estimées pour trois branches de l’industrie manufacturière (textile, chimie, métallurgie), ainsi que deux régimes de change: un régime de taux de change fixes, représenté par six pays de la zone CFA, et un second, plus flexible, représenté par cinq pays n’appartenant pas à cette zone. Il en ressort que la politique de change influe largement sur les performances à l’exportation du fait des conséquences importantes des variations du taux de change réel effectif et de l’incidence ...

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Paper provided by OECD Publishing in its series OECD Development Centre Working Papers with number 134.

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Date of creation: Mar 1998
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Handle: RePEc:oec:devaaa:134-en

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  1. Balassa, Bela, 1990. "Incentive policies and export performance in sub-Saharan Africa," World Development, Elsevier, vol. 18(3), pages 383-391, March.
  2. Medhora, Rohinton, 1990. "The effect of exchange rate variability on trade: The case of the West African Monetary Union's imports," World Development, Elsevier, vol. 18(2), pages 313-324, February.
  3. Sapir, Andre & Sekkat, Khalid, 1995. "Exchange rate regimes and trade prices Does the EMS matter?," Journal of International Economics, Elsevier, vol. 38(1-2), pages 75-94, February.
  4. Devarajan, Shantayanan, 1997. "Real Exchange Rate Misalignment in the CFA Zone," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 6(1), pages 35-53, March.
  5. Pinto, Brian, 1989. "Black Market Premia, Exchange Rate Unification, and Inflation in Sub-Saharan Africa," World Bank Economic Review, World Bank Group, vol. 3(3), pages 321-38, September.
  6. Grobar, Lisa Morris, 1993. "The effect of real exchange rate uncertainty on LDC manufactured exports," Journal of Development Economics, Elsevier, vol. 41(2), pages 367-376, August.
  7. Cottani, Joaquin A & Cavallo, Domingo F & Khan, M Shahbaz, 1990. "Real Exchange Rate Behavior and Economic Performance in LDCs," Economic Development and Cultural Change, University of Chicago Press, vol. 39(1), pages 61-76, October.
  8. Thierry Latreille & Aristomène Varoudakis, 1996. "Croissance et compétitivité de l'industrie manufacturière au Sénégal," OECD Development Centre Working Papers 118, OECD Publishing.
  9. Ronald MacDonald & Peter B. Clark, 1998. "Exchange Rates and Economic Fundamentals," IMF Working Papers 98/67, International Monetary Fund.
  10. Savvides, Andreas, 1996. "CFA Franc Zone Membership and Exchange Rate Variability," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 5(1), pages 52-68, March.
  11. Ghura, Dhaneshwar & Grennes, Thomas J., 1993. "The real exchange rate and macroeconomic performance in Sub-Saharan Africa," Journal of Development Economics, Elsevier, vol. 42(1), pages 155-174, October.
  12. Bhagwati, Jagdish N & Hansen, Bent, 1973. "A Theoretical Analysis of Smuggling," The Quarterly Journal of Economics, MIT Press, vol. 87(2), pages 172-87, May.
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