African trade, investment and exchange rate regimes and incentives for exporting

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Author: Oyejide,T. A.

Published by:  African Economic Research Consortium (2007)

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The emerging trade strategy in many African countries appears to have at least two components:  

  • seeking improved external market access for a much wider range of African's export products
  • seeking ways to eliminate the export supply response constraints which have hindered the growth and diversification of the region's export basket.

An integral part of the second component consists of measures aimed at improving the incentives for exporting activities. This paper suggests that such incentives can be direct and explicit when they take the form of autonomous, complementary and/or compensatory measures which are specifically targeted at promoting exporting activities. Also they may be indirect and implicit when they are derived as by-products of policies targeted at other objectives.

The main research issue that emerges is an analysis of the extent to which incentives for exporting generated by each country's trade, investment, and exchange rate regimes may cancel out the incentives provided for exporting activities. This requires a comprehensive description of the trade, investment, and exchange rate regimes as well as the various explicit export incentives and an analysis of the evolution over identified sub-periods.

There should also be a forward-looking component to this research. This requires the simulation of the likely effects on incentives for exporting activities of selected future reforms of the country's trade, investment and exchange rate regimes as well as its explicit export incentives schemes. This should be based on the estimates obtained from the previous series of impact analysis and on the effectiveness of the explicit export incentives either currently existing or that may be proposed for adoption and implementation.