Tesfaye: Determinants of Agricultural Export in Sub-Saharan Africa: Evidence from Panel Study (62-70) Page 62 American Journal of Trade and Policy ● Vol 1 ● Issue 2/2014 Determinants of Agricultural Export in Sub- Saharan Africa: Evidence from Panel Study Eyayu Tesfaye Senior Lecturer, College of Business and Economics, Department of Economics, Addis Ababa University, Addis Ababa, Ethiopia E-mail for correspondence: tesfaye.mulu@gmail.com Cell Phone: +251913034147 Received: Aug 4, 2014; Accepted: Aug 22, 2014; Published: Aug 30, 2014 Source of Support: Nil Conflict of Interest: None Declared ABSTRACT Despite the critical importance of agriculture in SSA countries; there are constraints behind, between, and beyond the border that directly and indirectly affects agricultural export performance of these countries. This paper attempts to explain theoretically and assess empirically the demand and the supply side factors affecting agricultural export of SSA countries. Specifically, the study focuses on analyzing the relative importance of the two major factors in determining the countries agricultural export performance. Panel data set with fixed effects estimation technique is used to address the question. The data set covers 47 SSA countries over the periods 2000-2008.The estimation result shows that on the supply side, factors such as real GDP, real GDP (lagged) of exporting country and lagged agricultural input use positively and significantly affects agricultural export of the SSA countries. The study also indicates that on the demand side the effect of per capita GDP of US, the major trading partner of SSA countries, is positive and significant. Moreover, the effect of US import tariff imposed on agricultural products from SSA countries is negative and significant. Therefore, the overall result reiterates that both supply side and demand side factors are equally important in determining agricultural export performance of SSA countries. Keywords: Agricultural export performance, demand side factors, supply side factors, fixed effects estimation INTRODUCTION It is not difficult to find statements lamenting Africa’s purportedly poor export performance. For example, the recent Commission for Africa study suggests that: “….The last three decades has seen stagnation in Africa. The composition of Africa’s exports has essentially remained unchanged, and has contributed to a collapse in Africa’s share of world trade…Africa will not be able to achieve the Millennium Development Goals, nor set itself on a sustainable path to growth and poverty reduction, without increased trade.” Commission for Africa (2005), as cited in Prizzon and Mold (2010), pp: 2. The United Nation Millennium Development Goals of reducing poverty by half, between 1990 and 2015, the proportion of people whose income is less than one dollar a day has energized the school of thought calling for Africa to redefine the importance of agricultural development. Wood (2002) argues that because it is land abundant, Africa will always have larger primary sector and smaller manufacturing sector than the land scarce regions of Asia and Europe. According to Cleaver (1985) agriculture is important in SSA contributing from 20% - 60% of GDP depending on the country; an average of 80% employment and 50-90% of export. Much of the industry and trade depends on agriculture. The importance of agriculture in SSA has not been stressed enough given that it is central to economic growth and most of the economic activities depend on it. Africa's exports remain dominated by primary commodities, and the share of agriculture in SSA’s total exports has declined sharply in the last 40 years. Only a few SSA countries have achieved significant diversification of their exports. Despite those trends, agriculture remains the main export-revenue source for many SSA countries and the largest income generator for their population (WB, 2007). The region's share of global agricultural export has declined gradually from almost 10% four decades ago to around 3% today. On the import side, the opposite pattern emerges as Sub -Saharan Africa is the only developing-country region that has seen its share of world agricultural imports increase rather than decrease (Baccetta, 2007; WB, 2007; and Christiansen, 2005).