Abstract:
Agricultural exports sector plays a significant role in the Sri Lankan economy
contributing approximately 7.5% to the GDP. However, the share of agricultural
exports to the GDP has been declined over the years. Hence, this study aims to find
out the determinants of the performances of the export volumes of the agricultural
export crops; tea, coconut, spices, and the total agricultural exports. Further, the
study analyses the relationship between the agricultural sector productivity and
the agricultural export volumes. Secondary data were collected between the first
quarter of 2002 to the fourth quarter of 2018. Ordinary least square method (OLS)
following the error correction model employed to develop the regression model. It
has discovered that five determinants;( the GDP value of the export crop, export
sector productivity, real wage rate index, world GDP, real effective exchange rate
and global financial crisis. Tea export volume has a positive relationship with the
GDP value of tea (0.8827) and a negative relationship with the real wage rate index
(-0.2480). The export volume of coconut has an inverse relationship with GDP value
of coconut (-0.3603) but positively correlates with the real effective exchange rate
(4.0181). Real wage rate (2.5896) and world GDP (37.2078) impacts positively on
the export volume of spices. However, the GDP value of spices (-2.9348) and real
effective exchange rate (-2.5298) have correlated negatively with the spice exports.
Real wage rate index (0.7636), real effective exchange rate (1.6203), and world GDP
(7.5237) have shown a positive link with the total agricultural exports. The GDP
value of tea (-1.0775) and sector productivity (-0.8134) have negative impacts on
total agricultural exports. Besides, the results showed that export volumes of tea
(-0.3695), coconut (-2.3869), spices (-2.1215) and total agricultural exports
(-0.8134) have a negative relationship with the sector productivity. The global
financial crisis had negative impacts on spices (-0.6822) and coconut exports
(-0.3832). This study concludes that new agricultural policies and programmes
should be implemented to improve agricultural exports in Sri Lanka.