Export Supply Modeling The Case For Zambia

This study has shown the dependence of the Zambian economy on copper exports for arnlarge proportion of its foreign exchange earnings. Against this background, the study has further attempted to model copper export supply in the framework of a cointegration and error correction model representation. The copper export supply function is estimated using annual data spanning the period 1970-2004. The general static long-run cointegration equation reveals that price as well as non-price factors are importantrndeterminants of copper export supply. However, when lags are incorporated, non-pricernfactors better explain the supply of copper exports. Conversely, with and without lags, inrnthe short-run, only non-price factors are seen as important determinants of copper export supply. These results show that emphasis on price factors in affecting exports may not be of essence to the Zambian case. Finally, these findings raise a range of issues that may guide policy assertion such as the overall goal of government and policy makers being one that seeks to diversify exports away from dependence on copper.rnKey Words: Copper, Export Supply, Cointegration, Error Correction Model, PricernFactors, Non-price factors

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