Factors Affecting Sesame Seed Exports in Burkina Faso: The Vector Error Correction Approach

Abstract

The research is financed by Academia Sinica, Taiwan. Grant No. AS-SS-107-02.

Abstract

Burkina Faso's (BFA) dependence on a single export crop, namely cotton, has so far threatened its economy since the fluctuating and uncontrollable drops in world cotton prices. The diversification of cash crops has become a national priority that is appropriated day by day by actors of rural development, and more particularly by farmers seeking to improve and secure their income. Thus, export crops, such as sesame, appear obvious and essential, not only for farmers’ income security but also for the country by its ability to attract currencies. In the last decade, BFA’s the sesame sector has recorded a tremendous growth both in quantity and value of exports to being the eighth world largest exporter of sesame seed. Considering its unequaled performance in the export of sesame seed, we deemed relevant to identify the key factors affecting that performance and to study their effects on sesame seed export earnings in order to draft appropriated policies aimed to enhance the country’s earnings. This study uses the cointegration approach, and has purposely designed exports value as the independent variable to analyze the country exports performance using time series data for the period of 47 years (1970-2016). One cointegration vector is found between the variables employed; thereby the Vector Error Correction Model has been performed. The empirical results reveal that nominal exchange rate, producer price, world export volume of sesame seed as a proxy of world demand, and world price are key factors affecting significantly the country’s exports performance in the short-run. Moreover, in the long-run nominal exchange rate, production, producer price, and world export price are factors determining significantly export earnings of sesame seed in Burkina Faso. For Burkina Faso to increase its market shares and export earnings, especially in the long-run, it is principally recommended to boost the production by increasing significantly yields and ensure an appropriate transmission of international prices increments to farmers.

Keywords: Agricultural Export, Determinants of Agricultural Exports, Sesame Seed, Cointegration, Burkina Faso.

DOI: 10.7176/DCS/10-4-03

Publication date: April 30^th 2020