Study On Determinants Of Cotton Exports In Zambia

An increase in a country's exports of goods and services can boost employment,improve the balance of payment position,increase foreign exchange earnings and is a conduit through which a country can foster economic growth.Zambia's economic growth since independence in 1964 has been supported by copper exports which have been vulnerable to external shocks such as copper price fluctuations and changes in external demand for copper.In view of this,the Zambian government has pursued macroeconomic policies that are aimed at reducing dependence on copper exports through diversification to non-extractive sectors,such as the agriculture sector and promotion of non-traditional exports such as cotton exports.Cotton exports earnings have been characterized by year on year variations.It is not clear what the major factors behind the fluctuations in Zambia's s cotton export earnings are.This study hence sought to determine factors that affect the growth of cotton exports in Zambia.The study utilized annual time series data that covers a period of 30 years from 1990 to 2019.The empirical results derived using the Auto Regressive Distributed Lagged(ARDL)model approach to co-integration reveal that cotton exports are co-integrated with real effective exchange rate,real income or Gross Domestic Product(GDP)of trade partners,foreign direct investment,real interest rate and world price.The ARDL analysis showed that cotton exports are affected by the real income of the trading partner,real interest rate,real effective exchange rate and the world price in the shortrun.Cotton exports are affected by real interest rate,real effective exchange rate and real GDP of the trading partner in the long-run.The Granger causality tests revealed that cotton exports Granger cause agricultural share of GDP.Cotton exports are highly elastic to exchange rate movements and the importer's GDP.The study recommends several policy measures that may be pursued by government to support growth of cotton exports,they are maintaining a stable macroeconomic environment including a stable exchange rate,increased budget support,improved regulation and seeking of new markets through enhanced engagement in regional integration and upscaling of the country's economic diplomacy.