Growth and Competitiveness of Non-Traditional Agricultural Exports in Zambia

Abstract

This study investigates the determinants of growth and competitiveness of Zambia's flower exports to three main export destinations—the Netherlands, the UK and Germany—using annual time series data from 1990 to 2010. Acknowledg-ing that time series data are often nonstationary, leading to misleading economic analyses, the study employs cointegra-tion and error correction models to establish factors of conditions growth and competitiveness of Zambia's flower ex-ports. The results show that supply and competitiveness of flower exports are positively influenced by domestic flower production, real GDP and population of importing countries, relative depreciation of domestic currency and world ex-port prices. In contrast, exports from competing countries and real interest rates were found to negatively influence flower exports. This seems to suggest that monetary policies and exchange rate regimes that promote trade are required for enhancing and fostering an environment favorable for flower production and exporting. In addition, the replacement of Zambia's flower exports by those from other countries dictates that there must be a quality improvement so the country's exports can compete favorably with those from other countries.