AGRICULTURAL EXPORT CAPACITY AND EXTERNAL DEBT SUSTAINABILITY IN EMERGING MARKETS: A THRESHOLD AND REGIME-DEPENDENT ANALYSIS

Abstract

In emerging market economies, agricultural export capacity plays a critical role in shaping economic growth and public borrowing dynamics. This study empirically examines the relationship between external debt and agricultural export performance in emerging market economies, emphasizing the position of agricultural export capacity in a process where public debt sustainability is a structural component of the "Public Sector Borrowing Requirement (PSBR)". Contrary to the view that agricultural exports, as a sub-component of export performance in countries, generally weaken export competitiveness, it is observed that increased agricultural production capacity in emerging markets leads to macroeconomic stability and a structure that may further hinder overall export competitiveness. In this area, the role of agricultural export capacity, particularly in conjunction with the impact of public borrowing trends and the presence of inflation in the country, reveals a different structure in emerging market economies, contrary to debt hypotheses. This phenomenon, particularly observed in emerging market economies, reflects a structure where the contribution to GDP is quite high, playing a role in economic growth between 30% and 40%. This also reveals a structure consistent with fluctuations in export revenues, based on the cyclical nature of borrowing behaviour. The inevitability of the regional external debt phenomenon, along with the fact that agricultural exports are primarily accepted as a factor in economic instability, stems from this point. On the other hand, the weakening of the impact of private, especially external, debt in line with public financial needs, and the existence of an export potential that can provide a significant financial resource to counter this negative structure, which is expressed holistically in the context of public borrowing, creates an important cyclical position, especially in emerging market economies. This cyclical nature highlights the inevitability of agricultural-focused industrial and economic development goals as a model for emerging markets.