The data used in thi.s study have got limitations in certain respects.
The first limitation is that population figures by wh.i:'ch GDP, Exports and Imports. were di vided · to get the ir values on a per capita '.basis are mere
est~m~t-~s. The re fore per ca pi ta values may be underestimates or over -estimates. For Zambia the import and export figures for 1979-80 were said
to be provisional. Projection of sorne variables may also result in under-estimating on overunder-estimating.
There j,s also the problem of aggregation. In .19.75 trhe Lame Convention which links African-Caribbean- and Pacifie countries (ACP) to the European Economie Community (EEC) was concluded. Hence the ACP group of countries has access to the EEC market for their primary products. It should, however, be noted that i t is not all the EEC mernber countries which buy the ACP's products. However, in this study it was sometimes unavoilable to assume that all EEC member countries purchase goods from the SADCC countries covered in this study. Th us the re is a danger of mis.representing the true situation.
"TABLE· G
E"xport CommodityComposition of the Six SADCC Countries during the Period Covered by the Thesxs
COUNTRY COMMODITY
1. Botswana
1
Beef., Copper/Nickel matte and diamonds;
2. Lesotho Mohair, Wool, Diamonds
3. Malawi Tobacco, Te a, Sugar, Groundnuts·
4. Swaziland Sugar, Woolpulp, Iron Ore
5. Tanzania Coffee, Cotton, Sisal
6. Zambia Copper
Sources: (a) International Financial Statistics, Yearbook, December, 1983.
(b) Africa South of the Sahara (Europa Publications) - Only Swaziland' s Iron Ore export figures were obtained from this source.
!
.!
TABLE H
List of Countries to which the Six SADCC Countries Exported during the Period Covered by the Thesis
COUNTRY IMPORTING COUNTRIES
! '
1. Botswana
2. Lesotho
3. Malawi
4. Swaziland
S. Tanzania
l'
6. Zambia
Belgium, France, Italy, Ireland, Luxembourg, 1
Netherlands, South Africa, United Kingdom and West Germany.
Belgium, France, Italy, Ireland, Luxembourgi 1
Netherlands, South_ Africa, United Kingdom, West Germany
Australia, Ireland, Netherlands, South. Afri-!
ca, United Kingdom, United States, West German y
Belgium, France, Italy, Ireland, Japan, Luxembourg, Netherlands, South Africa, United Kingdom, West Germany.
France, Italy, Ireland, Belgium, Sweden, Netherlands, West Germany, Japan, United Kingdom, United States, Luxembourg.
United Kingdom, United States, West Germany,!
Italy, Japan, Luxembourg, Netherlands, Ire-land, France and the EFTA countries.
Source: Africa_ South of the Sahara (Various issues, 1971-84)
\
1
\CHAPTER FIVE
ANALYSIS OF RESULTS 5.1. ESTIMATION PROCEDURE
Two approaches were adopted in estimating the relevant import and export elasticities. The first approach is based on the nominal values of the se variables~ For convenience the Ordinary Least Square
(OLS) estimation proce~ure was used to estimate the elasticities.
The co-efficients in the regression equations. are elasticities because the functions were transformed into logarithm forma.
It will be recalled that according to the Prebisch Thesis, the center's income elasticity of demand for the periphery's primary products is lesa than the periphery's incarne elasticity of demand for the centre's industrial products. That is, fM Y'">f_M Y (see
p p c c Chapt er One p.5 for
the definition of the terms). The re sul ta for per · .capita . real values are presented below on a country by country basie.
5. 2. RESULTS OF THE RELATIVE INCOME ELASTICITIES BETWEEN THE CENTER
1}
1) ··. ...
AND THE PERIPHERY USING REAL VALUES·-· ·
M pc M cp
BOTSWANA: (i) log M pc
=
-3.405 + 1. 4211 log Ybt-value 8.2785
R2 0.8616 SEE 0.2377
per capita real importa of industrial products from the center into the periphery.
per capita real importa of pri~ary products from the periphery into the center.
(ii) log M cp -2.2168 + 1. 3263 log y c t-value
o . .
J877R2 0.0534 SEE 0.8106.
LESOTHO: (i) log M -7.9094 + 2.3498 log y pc 1
t-value 2.6105
R2
=
0.3825SEE
=
0.6459(i:U log M cp -1.666 - 0.5269 log y c
t-value
=
0.3912R2 0.0139 SEE 0.6696
MALAWI: (i) log M pc 2.4216 + 0.3676 log y m
t-value 0.9069
R2 0.0695 SEE 0. 140.7
(ii) log M -6.60.32 + 2.4987 log y
cp c
t-value
=
-7.-7964R2 0.8467 SEE 0.1180
SWAZILAND: (i) log M -4. 1864 + 1.5251 log y
pc s
t,-,value 5.2569
R2 0.715.3 SEE 0. 1861
(ii) log M 1. 448-7 - 1.0:796 log y
cp c
t-value
=
2.5269R2 0.3673 SEE 0.3587
•. J TANZANIA: (i) log M pc 0.0157 + 0.7105 log Yt
t-value .12.5955
R2 = 0.9351 SEE
o.
2989(ii) log M 0.1367 0.2826 log Y
cp c
t-value 0.0476
R2 0.2759 SEE =
o.
2933ZAMBIA: (i) log M -7.9809 + 2.0205 log Y
'· pc z
t-value 5. 1378
R2 0.7058 SEE = 0.2314
(ii) log M 0.4754 + 0.1142 log y
cp c
t-value
o.
3101R2 0.0086 SEE 0. 199.5
Aggregated for the Periphery: (i) log M :::; -4.1073 + 1.4191 log Y
pc p
t-value 4.8657
R2. 0.6827 SEE 0.1417
(ii) log M 0.9307 + 0.1279 log Yc cp
t-value== ' 0.6673
SEE==- 0.0966
TABLE I:
Country
1. Botswana 2. Lesotho 3. Malawi 4 Swaziland
·?·
Tanzaniap
Zambia7.Aggregated data for periphery
Summary of Resulte of the Relative rncome Elasticities between the Center and the Periphery Using Real Values
..
In come R2
Elasticities T-value
p c p c p c
1. 4211 1. 3263 0.8616 0.0534 8.2785 0.7877 2.3498 -0.5269 0 3825 0.0139 2.6050 0.3912 0.3676 2 4897 0 0695 0 8467 0.9069 7 7964 1 5251 -10796 0 7173 0.3673 5·2569 2.5267 0.7105 -0.2826 0.9351 0.2759 12.5955 2.0476 2 0205 0.1142 0.7058 0.0086 5.1378 0.3101
1. 4191 0.1279 0.6827 0.0389 4.8657 0.6673
Key: p periphery; c = center
• On the basie pf the incarne elasticities alone, it can b~ said . generally that the above resulta, except for Malawi, conform to a priori expectations in spite of the poor performance of the other statistics auch as R 2 , t-value, and SEE. The brief discussion that ensues below, will help shed sorne light on this generalisation.
All the countries (and the periphery taken as an aggregate) considered in this thesis, except Malawi, have high import elasticities vis-à-vis the center's law import elasticity ; in fact there are indications that primary· products from Lesotho, Swaziland and Tanzania are inferior goods in the center because the center's incarne elasticity of demand for the products of these three countries is negative. Malawi has a law import elasticity of the arder of 0.3676 in respect of the center's industrial products. vis-à~vis· the center's ~ighimport elasticity of 2.4897 in respect o,f Malawi' s pri~ary~ products. However during the period under review the re was a ris.e in the world demand for, and in the priees of tobacco
(Malawi's chief export commodity), the center's high import elasticity for Malawi's products may be reflective of these developments.
The ~2 for the import demand function for Botswana, Swaziland, Zambia, Tanzan.i.a. a.nd the· aggregated data. for the periphery are faiJ!::ly
satis.factory i wh.ile the R2 for Lesotho and Malawi are poor (0.3825 and 0.0695 respectively). As regards the center's import demand func.tion results
for all the countries:, except Malawi, as well as the results for the aggre-gated data fa! the pe.:J;iphery have pool:" R2•
Botswqna., Lesotho, Swaziland Tanza.nia and Zambia have fairly satisfactory t-:va.lues· for their import demand functions. The aggregated data for the pe:J;iphery and Malawi have poor.t-values. For the centre's
import demqnd function the t-values are poor in respect of Lesotho, Botswana and Zambia and the q.ggregated '. data fol:" the periphery. For the rest of the countries., the t-ya.lues are satisfa.ctory. In spite of these limitations, the relative elast,tcities, the t-values and R2 seem ta ~ndicate a strong evidence in the SADCC countries for the Prebisch Thesis. In fact the negative
in come elasti.ci ties for the center and the. poor level of significance of sorne of the. elastïcitïes for the center indïcate that income is not a significant positi've influence on the experts of the periphery.
5.4. RESULTS FOR THE EXPORT AND IMPORT ELASTICITIES WITHIN THE PERIPHERY