Effect of exchange rate volatility on cocoa export in Côte d’Ivoire

Abstract This study investigates the impact of exchange rate volatility (ERV) on cocoa exports in Côte d’Ivoire from 1960 to 2024. Using an extended gravity model framework, the analysis incorporates key variables such as the real exchange rate (RER), total factor productivity (TFP), economic mass, and structural trade frictions. ERV is measured employing the Peree and Steinherr, capturing long-run deviations and structural misalignments. The model includes major importing countries, with Ghana examined as a comparative case to assess the influence of currency regimes and productivity structures on export performance. Fixed effects models and Newey–West robust standard errors are employed to ensure statistical reliability. Interaction terms are incorporated to explore industry-level heterogeneity. Results indicate that ERV positively influences cocoa exports under high productivity conditions, though the effect is conditional and nonlinear. Improvements in RER significantly enhance trade competitiveness. Quantile regression confirms that ERV exerts a stronger impact on top-performing exporters, suggesting that firm-level characteristics such as scale, adaptability, and risk management capacity matter. These findings underscore the importance of productivity, macroeconomic stability, and supportive trade policy. The study contributes to the literature on macroeconomic shocks in agricultural trade and offers strategies to enhance resilience and international competitiveness in Côte d’Ivoire’s cocoa sector.