**Figure 15: Trends in EXPY for Togo and WAEMU countries (LHS), and other benchmark countries (RHS), 1980‐2006,.**

<!-- Start of picture text --> p<br>7,000 12000<br>Benin<br>6,000 Burkina Faso 10000 Malaysia<br>Cote D'Ivoire China<br>5,000 Cape Verde 8000 South Africa<br>Ghana India<br>The Gambia 6000<br>4,000<br>Guinea‐Bissau Mauritius<br>Liberia 4000<br>3,000<br>Mali TOGO<br>Niger 2000<br>2,000 Nigeria<br>Senegal 0<br>1,000 Sierra Leone<br>1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006<br>Togo<br>Real US$ of 2000<br>Real US$ of 2000 per capita<br>1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006<br><!-- End of picture text --> _Source:_ Export diversification data, PRMED, World Bank.

**Given the country’s income level, Togo’s EXPY remains below expectations.** As reported by Hausmann et al (2005) there exist an empirical relation between EXPY and a country’s income level that is explained not only by construction of the indicator. Once a set of controls ‐ as rationalized by the authors ‐ have been accounted for, the income value of Togo’s export basket remain below that predicted by the country’s per capita GDP (Figure 16).

**Figure 16: Residual of EXPY regression after controlling for independent variables suggested by Hausmann et al (2005).**

<!-- Start of picture text --> Measure of Unobserved Factors Affecting EXPY (Residuals of OLS<br>Regressions of EXPY on Controls Suggested by Hausmann et al.). 2006<br>100%<br>50%<br>0%<br>-50%<br>-100%<br>-150%<br>Togo<br>Observed EXPY<br>Observed EXPY - Predicted EXPY as % of<br><!-- End of picture text --> _Note_ : A negative value indicates that a country’s EXPY is below that suggested by its income level once one factors in the values for that country of selected explanatory variables. _Source_ : Authors’ calculations.

**It is however important to note that a significant part of Togo’s imported goods are directly re‐exported to Nigeria as well as neighboring land‐locked countries, to the extent that aggregated export and export diversification indicators may not reflect actual economic activity.** During the 2000s, according to IMF (2007) about 16% of exports (11% of imported goods) were re‐exported, mainly to neighboring West African countries. It is however very difficult to estimate any numbers and thereby effects of this type of transit trade. Also, it is important to differentiate between the re‐exportation to the land‐locked countries, which is a type of activity that Togo will continue engaging in and where the Lomé Port is part of the value chain for these products. However, the re‐exportation to Nigeria is a consequence of unfavorable trade policies in Nigeria, which means that this re‐ exportation is not based on Togo’s comparative advantage and may be disrupted as policies in Nigeria changes. Also, the re‐exportation to Nigeria takes many forms and is therefore less measurable than the other types of re‐ exportation.

**Finally, over the long term, Togo has experienced deterioration on its term of trade due to stagnant price trends in the country’s main exportable products from the 1970s through the early 2000s; although import prices have consistently increased during the same period (** Figure 17 **).** However, during the 2000s both prices of traditional commodities and of main imports (including food and oil products) have shown sharp increases leading to an overall stagnation in the terms of trade.

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