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Democratic Republic of Congo : Product and Market Concentration and the Vulnerability to Exogenous Shocks

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World Bank (WB)

Abstract: The high level of exports and their product and market concentration exposes the Democratic Republic of Congo to the economic fluctuations of the country's trade partners. This paper uses the United Nations Conference on Trade and Development trade data set to analyze the Democratic Republic of Congo's export patterns for the period 1960-2014. The data confirm that the country's exports remain highly concentrated. The product concentration on minerals is high and reaches exceptional levels. The geographic concentration is also high, while there is a shift in destinations. Hence, EU27, traditionally the main market destination for the Democratic Republic of Congo, lost its importance to China for most of the past decade. This trend continued to increase in the past few years from 2010 to 2013. The clear prevalence of commodity products within the Democratic Republic of Congo's exports and the higher exposure to the Chinese economic cycle are sources of vulnerability. The empirical analysis indicates that the country's exports appear to be significantly sensitive to foreign demand fluctuations. This exposure increases the volatility of the country's macroeconomic framework to exogenous shocks, with negative consequences on growth in gross domestic product and on external balances. The analysis concludes that increasing the Democratic Republic of Congo's resilience requires product and market diversification of exports. This diversification requires improvements in the investment climate and business environment, with emphasis on skills and infrastructure.
Type: Working Paper
Publications & Research
Publications & Research :: Policy Research Working Paper
Link: http://hdl.handle.net/10986/24539
Subject: EXPORT PATTERNS
EXPORT RECEIPTS
TRADE VOLUME
MERCHANDISE
REGULATORY FRAMEWORK
MACROECONOMIC INSTABILITY
HUMAN CAPITAL
EXPORT MARKETS
VALUE ADDED
ECONOMIC GROWTH
PRODUCTION
VOLATILITY
TRADE COSTS
MERCHANDISE EXPORTS
FINANCIAL CRISIS
INCOME
VALUE
CREDIT
MACROECONOMICS
EXPORT PERFORMANCE
DEMAND
GDP PER CAPITA
EXPORTS
ELASTICITY
TRADE FLOWS
PRICE CHANGES
ECONOMIC FLUCTUATIONS
INCOMES
EXPENDITURES
AGRICULTURE
CURRENT ACCOUNT DEFICIT
EXPORT PROMOTION
GRAVITY MODEL
TRADE FACILITATION
PRICE
MARKET
EXPORT REVENUE
EXPORT DEPENDENCE
TRADE SURPLUS
SUPPLY CHAIN
MONETARY POLICIES
DEVELOPED COUNTRIES
TRADE VALUE
TRADE DATA
FOREIGN MARKETS
TRADE
MACROECONOMIC STABILITY
GDP
TRADE PARTNERS
GOODS
MARKET CONCENTRATION
INTERNATIONAL MARKET
EXOGENOUS SHOCKS
GROWTH RATE
BILATERAL TRADE
INVESTMENT
CURRENCY
DEVELOPMENT ECONOMICS
EXPORT EARNINGS
INTERNATIONAL PRICES
CURRENT ACCOUNT
SUPPLY
TRADE DIVERSIFICATION
FOREIGN CURRENCIES
SURPLUS
PRODUCTS
CUSTOMS
EXPORT PROMOTION AGENCIES
EXTERNAL SHOCKS
EXPORT VOLUMES
TRADE PARTNER
INVESTMENTS
EXPORT BASKET
EXPORT
MONOPOLISTIC COMPETITION
MARKETS
ACCESS
IMPORTS
PRODUCT
NATURAL RESOURCES
EXPORT DIVERSIFICATION
GROSS DOMESTIC PRODUCT
EXPORT SHARE
EXPORT MARKET
EXPORT DYNAMICS
PRICES
VALUE OF EXPORTS
FOREIGN CURRENCY
DEVELOPMENT POLICY
LDCS




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