Global Journal of Human Social Science, E: Economics, Volume 23 Issue 3

Analysis of Agricultural Exports and Economic Growth in Benin Blanchard Félix Dossou Summary- The agricultural sector remains a potential lever for economic growth in the South. Thus, agriculture now represents only 23% of GDP in low-income countries, 10% in intermediate countries and 2% in high-income countries. In this situation, our paper aims to empirically analyse the impact of agricultural exports on economic growth in Benin. The econometric specifications are derived from a neoclassical production function and use data covering the period 1970- 2021. The empirical results show that agricultural exports have a positive effect on economic growth. The causality test proves the existence of a causal relationship from economic growth to agricultural exports. In particular, these results prove the importance of an economic policy favourable to the promotion of agricultural investment in Benin. Keywords: agricultural exports, economic growth, causality test, benin. I ntroduction griculture is considered a major element in the modification and improvement of the structure of economies. But the pace of these structural changes, and their impact on the growth and development of economies, seem to vary greatly from country to country, and are often very uncertain, much more so than standard theory would have predicted. Moreover, the rules of international trade have changed; the era of liberalisation advocates trade based on comparative advantage Berthelier et al. (2005). However, it would seem that it is on this agricultural transition that the development of many countries in the South depends, even if the process resulting from the Industrial Revolution leading to a transfer of assets from agriculture to other sectors seems difficult. There are many explanations for the positive effect of exports on economic growth. Exports are a component of aggregate demand, and therefore provide an outlet for local goods and services. They are also a source of foreign currency inflows to meet imports. Finally, they are a potential component of state revenue through the customs duties they may generate or when they are carried out by public enterprises. In addition, some argue that for poor countries to become richer, it is important that they change the composition of their exports. Debates on the Prebisch-Singer thesis (1959) and the need for industrialisation have prioritised diversifying economies away from commodities because of deteriorating terms of trade, low value added and slow productivity growth. Similarly, the Food and Agriculture Organisation of the United Nations (FAO) (2004) maintains that without export diversification in developing countries, declining and fluctuating export earnings have had a negative impact on incomes, investment and employment. Through diversification, investment risks are spread over a wider portfolio of economic sectors, resulting in higher revenues (Acemoglu and Zilibotti, 1997). According to Romer (1990), diversification can be seen as a factor that contributes to improving the efficiency of other factors of production. Furthermore, diversification helps countries to protect themselves against terms of trade deteriorations by stabilising export earnings. Economic growth and structural change depend on the types of products that are traded (Hausmann and Klinger, 2006; Hwang, 2006). Thus, through export diversification, an economy can move towards the production and export of more sophisticated products, which can contribute strongly to its economic development. Benin, like other countries in sub-Saharan Africa, suffered the full force of the economic and social crises of the 1980s. The national economy was faced with major imbalances. This crisis was essentially characterised by a significant slowdown in economic growth, a significant drop in per capita income and the aggravation of internal and external imbalances (deterioration of the balance of payments, growing public deficits). To remedy this situation, the country embarked on a process of liberalisation of its economy under the aegis of the Bretton Woods institutions from 1989 onwards. Since then, enormous reforms covering all areas of economic life have been implemented, with those relating to trade policy taking pride of place. In this context, measures to abolish quantitative restrictions and other non-tariff measures have been initiated. Moreover, Benin’s exports are essentially based on cotton, and it is likely that the cost of cotton on the international market will gradually fall, which will have a considerable impact on the country’s export earnings and economic performance. The desire to increase exports and gradually reduce the economy’s vulnerability to external shocks has led Benin to choose to diversify the economy by promoting other promising sectors. Since 1997, the contribution of the primary sector to GDP has fallen; it currently represents more than 33% of GDP and more than 95% of export earnings. The cotton sector remains the dominant activity, accounting for 13% of GDP and 35% of tax A © 2023 Global Journals Volume XXIII Issue III Version I 1 Global Journal of Human Social Science - Year 2023 ( )E Author: University of Parakou (UP), Benin, Macroeconomist. e-mail: blancharddossou@gmailcom