Democratic Republic of Congo : Product and Market Concentration and the Vulnerability to Exogenous Shocks
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...
Main Authors: | , |
---|---|
Language: | English en_US |
Published: |
World Bank, Washington, DC
2016
|
Subjects: | |
Online Access: | http://documents.worldbank.org/curated/en/2016/06/26442877/democratic-republic-congo-product-market-concentration-vulnerability-exogenous-shocks http://hdl.handle.net/10986/24539 |
Summary: | 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. |
---|