The Impact of Political Instability on Madagascar Vanilla Exports

摘要

style="text-align:justify;"> The main purpose of this paper is to investigate how the political instability in 2009 affected the Madagascar vanilla exports. Madagascar vanilla sector has experienced robust growth over the past decade which contributes to both the economy and the job creation, especially in northeast region where Vanilla was planted. However, this growth faced a serious problem after the political instability in 2009. This paper shows that the suspension of Africa Growth and Opportunity Act (AGOA), due to the political instability, had a large negative impact on vanilla exports. To estimate its impacts on vanilla exports, the international trade data permit us to isolate those impacts from various factors between Madagascar and other vanilla exporting countries by using the different-in-different (DID) technique. We take the sample of 2007 to 2011 by using Tobit model with random effects in addition to OLS with fixed effect in order to observe how far political instability hampers the vanilla exports in Madagascar. Through analysis, we find that the political instability has a negative effect on economic growth in terms of Madagascar vanilla exports.