Determinants of Aggregate Primary Commodity Export Supply from Africa: An Econometric Study

Abstract

The literature of commodity supply functions is characterized by explanatory variables which are either current or lagged (relative/ prices. This study not only underlines the existence of other factors but also emphasizes their explicit incorporation in estimation. By using pooled data of African countries, first, price focused estimations am explored. Subsequently estimation using other relevant regressors, which are rare in the literature, is carried. The result shows that (a) there is a clear difference between UNCTAD’s 'world prices and the regional price constructed for Africa, hence previous studies using the former could have biased elasticities (b) real exchange rate has statistically significant elasticity with clear long and short run distinction, this underscores the relevance of the Error Correction Model (ECM) (cl capital formation indicators are also found to have positive elasticities, (d) mere is a venation across regions and (e) estimation with foreign inflow included gives a mixed result.