The Impact of International Prices and Exchange Rates on Domestic Food Prices in Zaire

Abstract

In sectoral trade analysis, agriculture is generally assumed to be a tradable sector. However, this is not the case within the time frame envisioned for policy reform programs in many developing countries. In this time frame, there are no agricultural products that can be classified as purely tradable or non-tradable. Evidence from Zaire shows that exchange rate changes have a differential impact on agricultural products depending on the characteristics of the product. The classification between tradable and non-tradable is not clear cut as the price of some non-tradables is also affected by changes in the international market or changes in the exchange rate.