For several years, cotton prices have been
experiencing a sustained decline on the world market. For cotton-producing
developing countries, this low price is the result of subsidies granted by
developed countries, particularly the United States and the European Union to
their producers. As a result, these developing countries expect substantial
gains in trade and economic development once the subsidies are ended. This
article aims to analyze the effect of U.S. and European subsidies on the production
of Burkina Faso, one of Africa’s leading cotton exporters whose cotton sector
is currently experiencing serious difficulties. The data used in this thesis
are secondary data, drawn from existing databases or specialized journals and
using an econometric model, the Vector Auto Regressive (VAR) model, the
analysis shows that a negative and significant impact of subsidies on cotton
production in Burkina Faso is highlighted. The consequences of the end of
subsidies on the Burkinabe economy should be positive. Analysis by the VAR
model through impulse response functions shows that U.S. and European subsidies
negatively affect Burkina Faso’s cotton production and that these impacts do
not occur directly but through the world price of cotton. Therefore, the State,
cotton companies and producers, the three main actors in the sector, should see
their situation improve simultaneously in the event of subsidy removal.
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