The impact of exchange rate policy on Sudanese agricultural export earning [Sudan]
1996
Abdel Karim, I.E.A.
This study analyzes the impact of price policies, especially devaluation on Sudan's agricultural export earnings. The demand equation for cotton and gum arabic and supply equation for all examined export crops (cotton, gum arabic, groundnut, sorghum and sesame) were estimated using trade elasticity approach based on annual data for the period 1970-1993. The results of the study tend to support the predominant view that demand for some of Sudan's export crops (cotton and gum arabic) are inelastic. Also, the study reveals that, there is a positive relationship between real exchnge rate movement and export volumes for all export crops. But, the response of export supply of sorghum and groundnut to chnges in real exchnge rate is greater than others (cotton, gum arabic and sesame), and this may be attributed to the little goverment intervention in the marketing of sorghum and groundnut. In reality, exports on average have been deteriorated since 1978. This could be attributed to the structural and technological rigidities to which Sudanese agriculture is particularly prone. The study concludes that, devaluation policy should be seen as a necessary but not sufficient policy instrument for rejuvenation of agricultural exports in Sudan. Therefore, the study suggests that, devaluation should be accompanied by the appropriate macroeconomic policies and the necessary supporting non-price policies
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