International Economics

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EXCHANGE RATE MOVEMENTS AND AGRICULTURAL TRADE IN MALAWI
(UNIVERSITY OF MALAWI, 2020-08-24) NG’ONG’OLA, CHIMWEMWE
Malawi is one of the countries that heavily relies on agriculture which accounted for 27.9% of the country’s Gross Domestic Product (GDP) in 2016. About 80% of Malawi’s exports are agricultural products with tobacco, sugar, tea and cotton as the main exports while imports are dominated by machinery, fuels, fertilizers and other intermediate inputs. The study aimed at examining the relationship between exchange rate movements and agricultural trade in Malawi specifically to assess the impact of exchange rate movements on agricultural exports and to assess the impact of exchange rate movements on agricultural imports. The study used annual data from 1980 to 2017 and the Autoregressive Distributed Lag was the estimation model used. The study found that there was no relationship between exchange rate movement and agricultural exports as well as agricultural imports in the long run however in the short run there was a negative relationship between exchange rate and agricultural imports.