Abstract
The implications of China's growth for the development prospects of sub-Saharan Africa have been the subject of recent attention. Interest in this topic is motivated by the increasing presence of China in the region, which in turn is reflected in the growing bilateral trade links. Against this background, this paper explores whether China's growth has stimulated agricultural exports in selected countries of Southern Africa, namely, Malawi, Mozambique, Tanzania, the Southern African Custom Unions and Zambia. We find little complementarity between China's agricultural import demand and the Southern African (SA) countries’ agricultural export supply. We also explore the possibility of China affecting SA agricultural exports through higher world agricultural prices associated with China's growing demand for food. We find that, although China has moderately increased agricultural prices (in an aggregated sense), SA exports do not seem to benefit from these price increases.Les implications de la croissance de la Chine pour les perspectives de développement de l’Afrique subsaharienne sont récemment devenues un sujet d’intérêt en raison de la présence croissante de la Chine dans la région qui s’exprime notamment par des relations commerciales bilatérales en progression constante. Dans ce contexte, cet article cherche à déterminer si la croissance de la Chine a stimulé les exportations agricoles dans certains pays d’Afrique australe tels que le Malawi, le Mozambique, la Tanzanie, les membres de la SACU et la Zambie. Nous trouvons peu de complémentarités entre la demande d’importations agricoles de la Chine et l’offre d’exportations agricoles des pays d’Afrique australe. Nous étudions également la possibilité que les exportations agricoles de l’Afrique australe soient affectées de manière positive par la hausse des prix agricoles mondiaux, du fait de la demande croissante de biens alimentaires de la Chine. Bien que ces évolutions aient eu effectivement un impact modéré sur les prix agricoles, nous montrons que les exportations d’Afrique australe ne semblent pas bénéficier de ces hausses de prix.
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Notes
See for example Goldstein et al (2006); Zafar (2007); Kaplinsky and Messner (2008) and Besada et al (2008).
Export prices divided by import prices.
Average 2000–2005 from The World Bank (2007).
Botswana, Lesotho, Namibia, Swaziland and South Africa.
Until the year 2000, the countries of the SACU reported their trade statistics together.
This section is based on the trade data retrieved from the UN's Comtrade Database, and used later on the econometric exercise. Agricultural products are defined as the first 24 chapters of the Harmonized System. These chapters comprise the bulk of the agricultural products defined in the WTO Uruguay Agreement on Agriculture.
The discussion is confined to 1995–2004 because it is for this period that we have a complete set of partners and reporters. The econometric analysis is extended to 2006, but using only a representative group of countries in 2005 and 2006.
Thereafter AvW.
A CES representation of consumer preferences is generally used to derive the gravity equation.
See Appendix B for details.
From now on we omit the subscript k as it is understood that we are focusing on the agricultural sector as a whole.
The imposition of unitary income elasticities implies that the regressand is log(X ij =E j Y i ), that is, the log of exports divided by the product of the income/production terms.
This is a crude proxy for applied bilateral tariffs, which are not available to us for the period considered here.
As is customary, we denote estimates with a hat. The hat covers the term 1−σ because we recover the trade costs using DIST
. Because β
I
=(1−σ)δ
i
, the results of this operation is 
.That is,
and 
The GAMS program employed for this is available upon request. The initial values for the unknown [
] were the indices [
ˆ
i
; P̂
j
] whose estimation was discussed above. The subscript c is to emphasize the counterfactual nature of the new price indices.
. Because β
I
=(1−σ)δ
i
, the results of this operation is 
.
and 
] were the indices [
ˆ
i
; P̂
j
] whose estimation was discussed above. The subscript c is to emphasize the counterfactual nature of the new price indices.References
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Acknowledgements
The author wishes to acknowledge the financial assistance of USAID through the USAID-Linkage fund and the support of the International Food Policy Research Institute working in partnership with Purdue University to make this project possible.
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Appendices
Appendix A
Derivation of the Gravity Equation
From the text, the exports X from i to j in product class k are given by
where σ k is the elasticity of substitution among origins, p i k is the supply price in country i, t ij k are trade costs such that t ij k−1 is the ad-valorem tax equivalent of trade costs, E j k is the expenditure of j in product k and P j k is the CES price index in the importing country j
Anderson and van Wincoop (2003, p. 175) achieve ‘general equilibrium determination of prices’ by imposing the market clearing condition
That is, in equilibrium, country i's output Y equals the sum of its exports and its own consumption. Anderson and van Wincoop (2003) solve the equilibrium prices p i k by first substituting A.1 into A.2
thus obtaining
This equilibrium supply price is substituted back in expression A.1
yielding AvW's gravity equation
where
Appendix B
Modification of the System by AvW
The objective is to slightly modify the system of AvW to eliminate the world production term Yk from the demand function X ij k and the price terms P j k and Π i k. This simplifies the identification of China's expenditures E j k=China and the interpretation of the constant term in the econometric implementation. Start with the system proposed by AvW (equations 5, 6 and 7 in Anderson and van Wincoop, 2003, p. 708)
subject to
where X
ij
k are the exports from i to j in product class k, E
i
k and Y
i
k are the value of production and expenditure in country i for product class k, t
ij
k are trade barriers (understood in a broad sense), P̃
j
k and 
i
k are the CES price indices in countries i and j respectively, and σ
k
is the elasticity of substitution among origins.
Rewrite X ij k with the price indices in explicit form
Simplify the Y k terms
rename the price indices purged of Y
k
as 
i
and P̃
j
, then, rewrite the system as
subject to
This is the system of equations 3, 4 and 5, in the text.
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Villoria, N. China's Growth and the Agricultural Exports of Sub-Saharan Southern Africa. Eur J Dev Res 21, 531–550 (2009). https://doi.org/10.1057/ejdr.2009.27
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DOI: https://doi.org/10.1057/ejdr.2009.27