Short-Run and Long-Run Dynamics of Sri Lanka’s Tea Exports: Evidence from an ARDL Model
DOI:
https://doi.org/10.46610/JESFR.2026.v07i02.002Keywords:
Agricultural exports, Ceylon tea industry, Export competitiveness, Tea exports, Time-series analysisAbstract
Ceylon tea is world-famous and a major contributing factor to Sri Lanka’s economy, but the amount of tea exported has been dropping for several years. This study looks at three main reasons behind this decline, namely yearly exchange rate, economic growth (GDP), and yearly rainfall (YR). The Autoregressive Distributed Lag (ARDL) model was used to examine annual time-series data from 2000 to 2024. The main sources of information used in this study are the World Bank, the Central Bank of Sri Lanka (CBSL), and the Tea Board of Sri Lanka. The model’s results demonstrate that, both in the short and long term, changes in the exchange rate have a significantly negative effect on tea export volume. This occurs because a depreciating currency makes imported agricultural supplies more expensive, which ultimately limits how much tea can be produced. Yearly rainfall demonstrates a positive short-run influence on exports but yields no significant long-run effect, reflecting the adaptive capacity of tea plantations over time. The economic growth rate shows a significant positive impact in the short-term and long-term. This indicates how macroeconomic expansion strengthens export logistics, productive capacity, and trade infrastructure. A key limitation is the exclusion of structural break variables to account for the 2021 fertilizer import ban and the 2021–2022 economic crisis.
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