Abstract
In this article the translog cost function with non-neutral parameter shifts is used to study the import demand functions of agricultural commodities which African countries export in competition with other developing regions of the world. It is shown that there has been a systematic bias against the import of these commodities from Africa in favor of importing them from other developing regions. It is then argued that these results support the apprehensions of many African leaders regarding the adoption of a policy of agriculture-based, exportled growth to accelerate economic development on the continent.
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Notes
OAU,The Lagos Plan of Action for Economic Development in Africa, 1980–2000 (Geneva: International Institute for Labor Studies, 1981).
World Bank,Accelerated Development in Sub Saharan Africa: An Agenda for Action (Washington, DC: World Bank, 1981).
It would be useful to raise and discuss several issues about the cause of and possible solutions to African economic stagnation. Such issues should include alternatives to agriculture-based, export-led growth such as the export of manufactured goods and mineral exports. In addition one would examine the pros and cons of an internally propelled growth strategy. Given the space limitations in a short article of this type, however, it is not possible to discuss these other issues thoroughly. Besides, other researchers have already examined these issues. See, for example, John Ravenhill, “Adjustment With Growth: A Fragile Consensus,”Journal of Modern African Studies, Vol. 26(2) (June 1988), pp. 179–210. See also Timothy M. Shaw, “The African Crisis: Debates and Dialectics Over Alternative Development Strategies For The Continent,” in John Ravenhill, ed.,Africa In Economic Crisis (New York: Columbia University Press, 1986), pp. 108–126. See also Barbara Jamieson, “Agricultural Development and Self Reliance,” in D.F. Luke and T.M. Shaw, eds.,Continental Crisis: The Lagos Plan of Action and Africa’s Future (New York: University Press of America, 1984), pp. 13–32.
World Bank,World Development Report 1987 (New York: Oxford University Press, 1987), p. 48.
Ibid, p. 176; See also E. Grilli and M. Yang, “Primary Commodity Prices, Manufactured Goods Prices and the Terms of Trade of Developing Countries: What the Long Run Shows,”The World Bank Economic Review (January 1988), pp. 1–48.
See Grilli and Yang, “Primary Commodity Prices,” p. 18; See also E. Grilli, R. Helterline, and P. Pollack, “An Econometric Model of the World Rubber Economy,”World Bank Staff Papers, #3 (1979), and E. Grilli, M. Yang, and C. Hooft Welvaars, “The World Rubber Economy: Structure, Change, and Prospects,”World Bank Occasional Papers (Washington DC: World Bank, 1980). C. E. Egbe, “Non Neutral Technical Change, Import Demand Functions, and Export Led Growth in Sub Saharan Africa,” paper presented at the Western Economic Association Conference (1988); also shows there is a technological bias in favor of domestic factors like labor, capital and synthetic rubber, against natural rubber, in the U.S. rubber goods industry.
L.R. Christensen, D.W. Jorgensen, and L.J. Lau, “Transcendental Logarithmic Production Frontiers,”Review of Economics and Statistics, Vol. 55 (February 1973), pp. 28–45.
Earnst Berndt, and Mohamed Khaled, “Parametric Productivity Measurement and The Choice Among Functional Forms,”Journal of Political Economy, Vol. 87, No. 6 (1979), pp. 1220–1245. See also H.P. Binswanger, “A Cost Function Approach to the Measurement of Factor Demand and Elasticity of Substitution,”American Journal of Agricultural Economics, Vol. 56 (May 1974), pp. 378–386. H.P. Binswanger, “The Measurement of Technical Change Biases With Many Factors of Production,”American Economic Review, Vol. 64 (December 1974), pp. 964–976.
I have used a model similar to that of U. Kohli and E. Morey, in “The U.S. Demand For Foreign Crude Oil: A Translog Approach,”The Journal of Energy and Development, Vol. 11, No. 2 (1986), pp. 115–133. In their study of United States import of foreign crude oil, Kohli and Morey estimate translog cost-based import demand functions. Their demand functions depend only on prices of the various sources of foreign crude oil, with no parameters for technical change (change in preference functions) or for some measure of output from which the demand for foreign crude oil is derived, e.g., refined gasoline or petroleum products in general. There is no theoretical justification for a Hicks neutral shift in their model. However, there could be some justification for the noninclusion of domestic petroleum or other fuels and factors of production. Once the decision has been made to use foreign crude petroleum, then decisions about domestic factors, or the level of output become irrelevant.
See for example, Binswanger, “The Measurement of Technical Change Biases.” See also, K.A. Mohabbat, A. Dallai, and M. Williams, “Import Demand Function For India: A Translog Approach,”Economic Development and Cultural Change, Vol. 32 (April 1984), pp. 593–605.
See D.F. Burgess, “Production Theory and The Derived Demand for Imports,”Journal of International Economics, Vol. 4, No. 1 (1974), pp. 103–117.
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This article has benefited tremendously from valuable comments and insights by two anonymous referees, the journal editor, as well as Adesina Fadairo and Ki-Ho Kim. All remaining errors are mine.
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Egbe, E.C. Agricultural exports and the agenda for accelerated development in Africa. The Review of Black Political Economy 20, 65–87 (1991). https://doi.org/10.1007/BF02689927
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DOI: https://doi.org/10.1007/BF02689927