COCOA EXPORT PERFORMANCE IN THE WORLD’S LARGEST PRODUCER

Abstract

The trade theories maintain that countries should specialize in the production and exportation of products that they have relative factor endowments or a competitive advantage. Therefore, Cote d’Ivoire has taken the advantage to become the largest producer and exporter of cocoa beans in the world. The product is also the leading foreign exchange earner in Cote d’Ivoire. Thus, the importance of the commodity to the country cannot be overstated.
Against this background, this contribution assesses the country’s export performance and determines some external drivers of cocoa export trade in Cote d’Ivoire in recent decades, using both empirical and descriptive approaches. Both trade specialization index and trade competitiveness indicators suggest that even though the country’s performance slightly fluctuated over the years, it remains competitive and have witnessed positive direction almost throughout the years under study. Also, using OLS and Granger causality, the OLS regression results reveal that cocoa bean production, world prices, trade openness and real effective exchange rate have a positive influence on cocoa export performance in Cote D’Ivoire. The Granger test shows that there exists a bidirectional causality running from production to export. A unidirectional is observed from world price to export, as well as from world price and exchange rates to production in Cote d’Ivoire. The government of Cote d’Ivoire and partners should create an enabling environment and some incentives to reinvigorate cocoa production and earnings for a sustainable export performance in the country.