Role of trade in natural rubber and palm oil in the composition of GDP in Ivory Coast
Purpose. This paper discusses the effect of natural rubber and palm oil exports on economic growth in Ivory Coast from 1980 to 2016 using World Bank data.
Methodology / approach. The analysis involved the use of Augmented Dickey-Fuller (ADF) and Phillips-Perron (PP) unit root tests and the ARDL model.
Results. This paper discusses the effect of natural rubber and palm oil exports on economic growth in Ivory Coast from 1980 to 2016 using World Bank data. The analysis involved the use of Augmented Dickey-Fuller (ADF) and Phillips-Perron (PP) unit root tests and the ARDL model. The results of the study show that there is a positive and non-significant relationship between natural rubber exports and short-term economic growth. On the other hand, in the long term, they have a positive and significant influence on economic development. However, in the short and long term, palm oil exports have a positive and significant impact on gross domestic product. Finally, labour, investment and market opening have a positive and significant effect on economic growth in the short and long term respectively. Therefore, the Ivorian government needs to promote good agricultural practices and agricultural financing in order to increase the competitiveness of the Hevea –Oil palm sector.
Originality / scientific novelty. Previous studies in natural rubber and palm oil focused mainly on its production, constraints to production and processing. However, very few studies on its effects on economic growth have been done so far. This study fills that gap. It expanded the existing literature and the subject of the causal relationship between natural rubber and palm oil exports and economic growth in Ivory Coast and shed light on required efforts to enhance the production and utilization of natural rubber and palm oil at larger scale to bring economic development in Ivory Coast. At last, the ARDL model is used to address this issue.
Practical value / implications. The generated information will be useful to a number of organizations including: research and development, marketers, producers, policy makers, government and non-governmental organizations to assess their activities and improve their mode of operations, to help better guide the design and implementation of policies and strategies. Finally, knowing the existing relationship between natural rubber and palm oil exports and economic growth, together with impediments faced by natural rubber and palm oil exports, the study provides the various ways to improve these exports by increasing exports capacity of local producers. Research on this issue is too important to inform policymakers regarding resource allocation in the natural rubber and palm oil sector to achieve economic growth.
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