Real Exchange Rate and Manufacturing Production in Africa: What Impacts?


A recent current of literature has suggested that low-income countries should systematically undervalue their currencies and adopt a floating exchange rate regime for their industrialization. Over the period 2000-2015, this article estimates the impact of real exchange rates of 40 sub-Saharan African countries, the majority of which are low-income and have a fixed exchange rate regime, on their manufacturing value added. It appears that the real exchange rates of African currencies against the dollar and the euro have little impact on manufacturing output; but their appreciation vis-à-vis the renminbi (in condition to remain moderate) favors the growth of manufacturing industry in Africa, while that vis-à-vis other developing countries’ currencies handicaps its industry development. The diversity of these results does not favor a systematic depreciation of African currencies.

Guillaumont Jeanneney S., Hua P. (2018) «Taux de change réel et production manufacturière en Afrique : quels impacts» [Real Exchange Rate and Manufacturing Production in Africa: What Impacts?], Revue d'économie du développement, vol. 26 (2), 2018, pp. 83-112.