Determinants of Swaziland’s Sugar Export: A Gravity Model Approach

Abstract

The sugar industry in Swaziland is the highest contributor to the government treasury through taxation, social services and trade. The sugar industry also plays a crucial role in the Swaziland’s economy by influencing economic growth and employment. Given the role of the Swaziland’s sugar industry, it is therefore important to understand the influencing factors of the Swaziland sugar exports volumes to its major trading partners. The study objective was to analyze the factors determining sugar export from Swaziland to her trading partners using a gravity model approach. The study used panel dataset for the period 2001 to 2013. The results showed that Swaziland’s GDP, importer’s GDP, importer’s land area and official common language had significant positive effects on Swaziland’s sugar exports. The study further revealed that the creation of COMESA and EU trading blocs had significant positive effects on the Swaziland’s sugar exports. This implies that the above-mentioned factors have contributed to the sugar trade flows increase during the time period under study. On the other hand, importer’s population, Swaziland openness and distance between Swaziland and her trading partner’s capital cities had a significant negative effect on Swaziland’s sugar export flows. It is therefore recommended that policies that lead to the exceptional advancement of the Swaziland and importer’s economy should be promoted which will have an effects on the Swaziland GDP and importer’s GDP. Trading with less self-sufficient, neighbouring countries and deepening the economic integration processes enhances Swaziland sugar exports flows.