Cote d'Ivoire : Volatility, Shocks and Growth

Key economic variables in Cote d'Ivoire vary widely from their long-run trends, moving in multi-year cyclical patterns. Cocoa prices move with cycles in growth rates, capital stock, real exchange rates, terms of trade, cocoa production, and coffee production and output. These patterns have become more pronounced since the 1970s as volatility increased. This paper characterize these cycles, estimates the cocoa price-quantity relationship, and analyzes co-movements due to shocks generate a forecast. Three key conclusions follow. First, the economy of Cote d'Ivoire has experienced two fundamental transitions, one in 1976 related to cocoa, and another in 1994 related to exchange rates. From 1960 to 1976, world cocoa prices grew steadily, and then fell in real terms. The country's growth showed a similar pattern. An econometric model indicates that the relationship between cocoa price and quantity experienced a break in 1976 and provides evidence of Cote d'Ivoire's significant influence on world cocoa prices. Second, cocoa price shocks affect growth rates and trade indicators, and are important sources of volatility in the Cote d'Ivoire. The terms of trade and real exchange rate are also sources of volatility for growth and productivity. Third, a forecast of per-worker output based on these variables predicts continued declines in GDP per worker in Cote d'Ivoire for the near future. This dismal forecast implies the need for a radical and rapid improvement on political, security, and economic management to reverse the two and a half decades of economic decline.

Bibliographic Details

Main Authors:	Bogetic, Zeljko, Espina, Carlos, Noer, John
Language:	English
Published:	World Bank, Washington, DC 2007-11
Subjects:	BIDDING, BUSINESS CYCLES, CAPITAL STOCK, CHOCOLATE, COCA, COCOA, COCOA BEANS, COCOA PRICE, COCOA PRICES, COFFEE, COFFEE BEANS, COFFEE PRICE, COFFEE PRICES, COFFEE PRODUCTION, COFFEE YIELDS, COMMODITIES, COMMODITY, COMMODITY EXPORTS, COMMODITY PRICE, COMMODITY PRICES, COMPETITIVENESS, CONSUMER PRICE, CONSUMER PRICE INDEX, CONSUMER PRICE INDICES, COTTON, COTTON PRICES, CROP, CURRENCY, CYCLICAL SWINGS, DEVALUATION, DEVELOPING COUNTRIES, DYNAMIC ANALYSIS, ECONOMETRICS, ECONOMIC HISTORY, ECONOMIC STATISTICS, EXCHANGE MARKETS, EXCHANGE RATE, EXCHANGE RATES, FAO, FORECASTS, FUTURES, GDP, GDP PER CAPITA, GROWTH RATE, GROWTH RATES, INCOME, INCOMES, INFLATION, LABOR FORCE, LOCAL CURRENCY, MACROECONOMIC SHOCKS, MARKET POWER, MARKET SHARE, MARKETING, OUTPUT, OUTPUT PER CAPITA, OVERVALUATION, POPULATION GROWTH, POSITIVE EFFECTS, PRICE CHANGES, PRICE LEVEL, PRICE QUOTATIONS, PRICE SERIES, PRICE VOLATILITY, PRODUCE, PRODUCTION INCREASES, PRODUCTIVITY, PRODUCTIVITY OF LAND, RA, RAPID GROWTH, RATE OF GROWTH, REAL EXCHANGE RATES, REAL GDP, SHARE OF WORLD OUTPUT, SPOT PRICE, SPOT PRICES, TOTAL FACTOR PRODUCTIVITY, TROUGH, VOLATILITY, WAGES, WEALTH, WORLD MARKET, WORLD MARKETS, YIELDS,
Online Access:	http://documents.worldbank.org/curated/en/2007/11/8789615/cote-divoire-volatility-shocks-growth https://hdl.handle.net/10986/7625
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