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Macroeconomic change, competitiveness and timber production: a five-country comparison

Macroeconomic change, competitiveness and timber production: a five-country comparison

This study analyzes how long-run macroeconomic fluctuations have affected timber
production levels in five tropical oil-producing countries: Gabon, Cameroon, Papua New
Guinea (PNG), Venezuela, and Ecuador. The core hypothesis is that oil booms, foreign
borrowing and other major foreign exchange inflows slow down timber harvesting. These
inflows cause “Dutch Disease,” depressing the price competitiveness of timber exports
and other trade-exposed sectors. A qualitative examination of long-run trends in the five
countries is combined with simple econometrics. The findings confirm a strong impact
of competitiveness on logging. Substantial real currency devaluation can greatly
accelerate timber exports. Yet, in middle-income countries with strongly expanding
domestic timber markets (Ecuador, Cameroon, Venezuela), home-market demand also
rises much with urban incomes and population. When full or partial import protection
occurs, this translates into rising domestic production. The relative weight of these two
potentially significant factors varies widely, so policies to influence extraction levels
need to be tailored accordingly.

Authors: Wunder, S.

Topic: macroeconomics,trade,logging,conservation,forest policy,history,oils

Geographic: Gabon,Cameroon,Papua New Guinea,Venezuela,Ecuador

Publication Year: 2005

ISSN: 0305-750X

Source: World Development 33(1): 65-86

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