Export Volatility and Diversification: Evidence from Sino-African Trade
40 Pages Posted: 4 Nov 2019 Last revised: 4 Jan 2020
Date Written: October 1, 2019
China's share of Africa's goods exports increased from less than 1% in 1989 to 12.4% in 2016. Did this rapid shift in Africa's exports help or hurt economic stability on the continent? To address the question, this paper decomposes export growth shocks into its components, to estimate the share of export volatility originating from sector volatility, country-specific volatility and idiosyncrasies that are not explained by factors specific to the exporting country or sector. China's surge in imports from Africa contributed to the rise of primary commodities' share of the continent's total exports, and in doing so, increased exposure to sector-specific volatility for the average African economy. Nevertheless, the trade shift towards China had little effect on aggregate export volatility, as it helped to diversify export destinations for many African economies.
Keywords: China-Africa Trade, Economic Volatility, Diversification
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