Infrastructure and Coffee Exports’ Fluctuations in a Small Open Economy: Case of Togolese Economy

Abstract

In the current context of boosting economic growth based on agriculture, the traditional determinants seem insufficient. It is therefore necessary to establish the role of non-classical factors that influence the evolution of agricultural exports. Thus, this paper aims to establish the role of transportation infrastructure in determining coffee exports in Togo’s economy. Firstly, the principal component analysis technique is used to construct a proxy of transportation infrastructure. Then the Error Correction Model is estimated under the gravity model framework. The data used in this study come mainly from FAO database, World Bank database and cover the period 1980-2014. The results reveal that transportation infrastructure is a good pillar for coffee exports enhancement in the short and long run. In addition, domestic production has a positive and significant effect on coffee exports. Regarding global factors, only the exchange rate affects long-term coffee exports. In terms of policy message, increase in transportation infrastructure investment is a strategy for increasing coffee exports.