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Wood Production in the Central African Republic’s Economy: An Error Correction Model (ECM) Analysis

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  • Befio Paulin Epaphrodite

Abstract

This work analyzes the effect of forest on the economy of Central African Republic, using the data from secondary source within the period of 1970-2015. The study employed error correction model (ECM) as econometric methodology to estimate the cointegration relationship among economic growth, agriculture value added, forest rent (in percentage of GDP) and forest product variables ( logs, roundwood, wood fuel and sawnwood), it also estimates long run and short run relationship between variables. Augmented Dickey Fuller (ADF) unit root test were employed. The result shows that forests play an important role in the world’s economy; they support both the economic growth and the ecosystem protection. The co-integration relationship result (using Engel-Granger) shows economic growth forest products variables (logs, roundwood, wood fuel and sawnwood) and other variables included in the model were co-integrated and therefore long run relationship exist among them. Testing the short run relationship shows the existence of short run relation between variables. The long run model shows logs production which the main exportable wood product in CAR having a positive and significant effect on the economy but we noticed that the affectation percentage is to low (0.08% change to GDP). This is due to the lack of control or traceability of the product and the luck of strong institutions (corruption) in the forestry sector.

Suggested Citation

  • Befio Paulin Epaphrodite, 2018. "Wood Production in the Central African Republic’s Economy: An Error Correction Model (ECM) Analysis," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 4(2), pages 105-111, June.
    • Handle: RePEc:khe:scajes:v:4:y:2018:i:2:p:105-111
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    References listed on IDEAS

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    1. Alan V. Deardorff, 2014. "Local comparative advantage: Trade costs and the pattern of trade," International Journal of Economic Theory, The International Society for Economic Theory, vol. 10(1), pages 9-35, March.
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    JEL classification:

    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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