Dynamic Relationships between Seafood Exports, Exchange Rate and Industrial Upgrading

Abstract

Few studies have examined the relationship between seafood export performance and exchange rate fluctuations. This paper investigates the short and long-term relationship between variables and the effect of currency depreciation on investment in industrial upgrading in the Namibian seafood industry. Employing the Johansen cointegration technique and a vector error correction model (VECM) on quarterly data from 2008 to 2020, we find that investment in industrial upgrading has a higher impact on exports than exchange rate fluctuations. Therefore, investment in industrial upgrading plays a significant role in mitigating the negative impact of exchange rate volatility. Key policy implications include the need to take advantage of currency depreciation to mitigate challenges to investment in industrial upgrading by increased budgetary allocations.