A differentiated good model of coffee and cocoa exports with reference to the CFA franc zone

Abstract

This paper employs the trade-shares methodology to estimate export functions for coffee and cocoa classified according to the market in which they are sold. Because two of the major coffee and cocoa exporting nations belong to the CFA franc zone, we investigate the impact of zone membership on export flows for these two commodities. Our results confirm the theoretical predictions that relative prices and market size are important determinants of exports. Moreover, participation in the zone has, on the whole, been beneficial to the exports of its members. Finally, our study contributes to the literature on the impact of exchange-rate variability on trade flows. It demonstrates that exchange risk depresses the volume of coffee and cocoa exports, displaying a more pronounced impact on zone-member exports.