TITLE:
Determinants of Export Demand Function for Malawi Tobacco
AUTHORS:
Nomore Nkhoma, Yohana James Mgale, Yunxian Yan
KEYWORDS:
Export Demand, Tobacco, Panel Data, Fixed Effects, Malawi
JOURNAL NAME:
Open Journal of Business and Management,
Vol.9 No.4,
July
20,
2021
ABSTRACT: This paper examines the export demand function of Malawi tobacco using
panel data from 1997 to 2019. It estimates the relationship of tobacco quantity
exported with Malawi’s export price, competitor’s export price, Gross Domestic
Product (GDP), Real effective exchange rate (REER) as well as the impact of the World Health
Organization’s (WHO) Framework Convention on Tobacco Control (FCTC). A double
log fixed effects model with driscoll- kraay standard errors as well as fixed effects model with Least Square
Dummy Variables (LSDV) model was used for
empirical estimation. The empirical results confirmed that there exists
a significant relationship among Malawi tobacco export demand, trade partner’s
real income and export price. Furthermore, REER was elastic, while own price
and cross price elasticities were less than zero. The results indicated that
Malawi should take advantage of the high
incomes of the tobacco importing countries to enhance international market share.