Export Competitiveness - Fuel Price Nexus in Developing Countries: Real or False Concern?

35 Pages Posted: 8 Apr 2019

See all articles by Kangni Kpodar

Kangni Kpodar

International Monetary Fund (IMF)

S. Fabrizio

International Monetary Fund (IMF)

Kodjovi Eklou

International Monetary Fund (IMF)

Date Written: February 2019

Abstract

This paper investigates the impact of domestic fuel price increases on export growth in a sample of 77 developing countries over the period 2000-2014. Using a fixed-effect estimator and the local projection approach, we find that an increase in domestic gasoline or diesel price adversely affects real non-fuel export growth, but only in the short run as the impact phases out within two years after the shock. The results also suggest that the negative effect of fuel price increase on exports is mainly noticeable in countries with a high-energy dependency ratio and countries where access to an alternative source of energy, such as electricity, is constrained, thus preventing producers from altering energy consumption mix in response to fuel price changes.

Keywords: Export competitiveness, Export growth, Oil subsidies, Energy prices, Demand elasticity, Developing countries, Retail fuel prices, Fuel Subsidies, Export growth, Developing countries., fuel price increase, non-fuel, fuel price, price shock, energy price

JEL Classification: F10, O13, Q43, E01, F1, E31, Q02, E64

Suggested Citation

Kpodar, Kangni and Fabrizio, Stefania and Eklou, Kodjovi, Export Competitiveness - Fuel Price Nexus in Developing Countries: Real or False Concern? (February 2019). IMF Working Paper No. 19/25, Available at SSRN: https://ssrn.com/abstract=3367408

Kangni Kpodar (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Stefania Fabrizio

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Kodjovi Eklou

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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