Economic Impact of the Cocoa Industry Case Study

Economic Impact of the Cocoa Industry - Case Study Example It lies between Liberia and Ghana and borders the North Atlantic Ocean. Other neighboring countries are Mali and Burkina Faso in the north, Guinea in the east, and the Gulf of Guinea in the south. (Central Intelligence Agency) Its principal city is Abidjan, which is the economic and political capital of the country. Yamoussoukro is its official capital city. (Bureau of African affairs) Ivory coast plays a major role in the economic and political stability of the whole of Western Africa, with people from poorer neighboring countries relying on it to provide employment.Felix Houphouet-Boigny was the main political figure leading the rebuilding of the country after the World War II. Consequently, he became the country’s president after it achieved independence in 1960. He motioned for the improvement of the conditions of the African farmers and other laborers. He believed that the path to African harmony was through gradual economic and political cooperation, recognizing the prin ciple of laissez faire in the internal relationships. The country began to prosper with the help and cooperation given by France. Up to now, France remains as one of the major markets of the country. In the 1980s the country's economy began to suffer as the population began to grow. This caused the decline in the county’s standard of living. â€Å"A failed coup in September 2002 left Cote d’Ivoire divided between a rebel-held north and government-controlled south transforming the country from a regional economic miracle to a conflict hot-spot.†Ã¢â‚¬  (IRIN) Today, the Ivory Coast is struggling to maintain economic and political vitality. Ivorian Economy Since the colonial period, the Ivorian economy is chiefly market based and depends a lot on the agricultural sector. Together with forestry, and fisheries, the three sectors account for a considerable part of the country’s Gross Domestic Product and of exports. â€Å"Almost 70% of the Ivorian people are involved in agricultural activity in one way or the other† (Cote d'Ivoire). As a result, the country’s economy fluctuates from time to time, depending on the international prices of its agricultural products, and productivity according to whether conditions. Its main products and exports are cocoa beans, coffee, and palm oil. Other principal exports are banana, cotton, pineapple, tuna, rubber, and tropical woods. Table 1 shows the ups and downs in Ivory Coast’s economy from 1980 up to 2005. Table 1 Gross Domestic Product and Dollar exchange rate of Ivory Coast from 1980 to 2005 (International Monetary Fund) Year Gross Domestic Product US Dollar Exchange 1980 2,121,163 211.27 Francs 1985 3,077,900 449.26 Francs 1990 2,939,400 272.26 Francs 1995 5,490,706 499.10 Francs 2000 7,416,793 709.87 Francs 2005 8,532,387 526.56 Francs Year 1990 has the lowest GDP although the CFA stands strong against the American Dollar. There was no drastic change in the economy until 1990. In the succeeding years, there was noticeable increase in the country’s GDP, but the country’s currency value decreased. Increase in GDP may be due to the country’s oil produce. On the other hand, the slump of CFA Franc in 2000 is largely caused by loss of foreign investors and decrease in agricultural profit due to the civil war. â€Å"To reduce the economic fluctuations caused by price variability, the government encourages diversification in export and intermediate processing of cocoa beans†. (Bureau of African affairs) â€Å"Despite attempts by the government to diversify the economy, it is still largely dependent on agriculture and related activities, which engage roughly 68% of the population†. (Wikimedia Foundation Inc.) The government continues to be optimistic that the