Income elasticity of ammonia imports in SSA and developing Asia

Here is a test of the importance of industry in developing Africa and Asia. Ammonia is a chemical with wide applications throughout industry, so if a country is substantially altering its industrial production the amount of ammonia it imports is likely to change too. I ran regressions to estimate the income elasticity of ammonia imports (a measure of the change in ammonia imported as income increases) for five industrialising Asian countries and five African countries using annual data from here. The results are in the table. Changes in income generally explain a far higher amount of ammonia import changes in the Asian countries than in the African countries, as measured by the R2 statistic.



The lowest income Asian countries (Cambodia and Vietnam) saw their ammonia imports fall steeply as they became richer. By comparison, the only African country with a strong link between income and ammonia imports (Kenya) has a positive link. A tentative explanation is that the two Asian countries switch to manufacturing their own ammonia imports as they industrialise, while Kenya continues to use foreign imports. Another explanation is that there are different shifts in and out of processes using ammonia across the countries. It would be interesting to know which explanation applies. There might be a market for African chemical manufacturers, given that ammonia manufacture is a well-known procedure (described here).