IDEAS home Printed from https://ideas.repec.org/p/ags/cmpart/243473.html
   My bibliography  Save this paper

Impact of Agricultural Exports on Economic Growth in Ethiopia: The Case of Coffee, Oilseed and Pulses

Author

Listed:
  • Yifru, Tigist

Abstract

More than 80 percent of the population in Ethiopia lives in rural areas and their main source of income is agriculture. Agriculture accounts for 45 percent of the Gross Domestic Product (GDP) and employs 85 percent of the labour force.Export of agricultural products constitutes 86 percent of the total foreign exchange earnings. The country has taken different measures to diversify and increase the contribution of the export sector to economic growth such as; export trade duty incentive scheme, export credit guarantee scheme and foreign exchange retention scheme to those wholly engaged in supplying their products to foreign markets. Despite the incentives taken by the country, the export sector has depended on a few agricultural products mainly coffee, oil seeds and pulses which are characterized by fluctuations in quantity, price and have low competitiveness on the world market. The objective of the study was to assess the trend and impact of agricultural (coffee, oilseed and pulses) exports on economic growth of Ethiopia over the last forty years by looking at: the existence of long run relationship between agricultural export and economic growth; the speed of adjustment in the long run and the existence of causality between the agricultural export and economic growth. The analysis was done using co-integration model, Error correction model and Granger causality model.The findings of the study showed that Coffee export and oilseeds export have a positive and significant relationship with economic growth. While, pulses export was found to have negative and insignificant effect on economic growth in short run and positive but insignificant in the long run. On the other hand the causality relationship found that there is bi-directional relationship between coffee export, oilseed export and economic growth whereas unidirectional relationship was found between pulses export and economic growth. Based on the findings, it is recommended that policies aimed at increasing the productivity and quality of these cash crops should be implemented. Also additional value should be added to them before exporting. Correspondingly, there is also a need to devote resources on the production of non-export goods in order to increase exports since they have bi-directional relationship. When this is done, it will lead to a higher rate of economic growth in Ethiopia.

Suggested Citation

  • Yifru, Tigist, 2015. "Impact of Agricultural Exports on Economic Growth in Ethiopia: The Case of Coffee, Oilseed and Pulses," Research Theses 243473, Collaborative Masters Program in Agricultural and Applied Economics.
    • Handle: RePEc:ags:cmpart:243473
    DOI: 10.22004/ag.econ.243473
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/243473/files/TIGIST%20YIFRU%20MSc%20THESIS.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.243473?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. By Mohsin S. Khan & Abdelhak S. Senhadji, 2001. "Threshold Effects in the Relationship Between Inflation and Growth," IMF Staff Papers, Palgrave Macmillan, vol. 48(1), pages 1-1.
    3. Wolassa Lawisso Kumo, 2011. "Working Paper 130 - Growth and Macroeconomic Convergence in Southern Africa," Working Paper Series 314, African Development Bank.
    4. Heller, Peter S. & Porter, Richard C., 1978. "Exports and growth : An empirical re-investigation," Journal of Development Economics, Elsevier, vol. 5(2), pages 191-193, June.
    5. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    6. Voivodas, Constantin S., 1973. "Exports, foreign capital inflow and economic growth," Journal of International Economics, Elsevier, vol. 3(4), pages 337-349, November.
    7. Helmut Lütkepohl, 2005. "New Introduction to Multiple Time Series Analysis," Springer Books, Springer, number 978-3-540-27752-1, June.
    8. Ram, Rati, 1987. "Exports and Economic Growth in Developing Countries: Evidence from Time-Series and Cross-Section Data," Economic Development and Cultural Change, University of Chicago Press, vol. 36(1), pages 51-72, October.
    9. Atish Ghosh & Steven Phillips, 1998. "Warning: Inflation May Be Harmful to Your Growth," IMF Staff Papers, Palgrave Macmillan, vol. 45(4), pages 672-710, December.
    10. Moschos, Demetrios, 1989. "Export expansion, growth and the level of economic development: An empirical analysis," Journal of Development Economics, Elsevier, vol. 30(1), pages 93-102, January.
    11. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    12. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
    13. Raymond Vernon, 1966. "International Investment and International Trade in the Product Cycle," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 80(2), pages 190-207.
    14. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
    15. Balassa, Bela, 1978. "Exports and economic growth : Further evidence," Journal of Development Economics, Elsevier, vol. 5(2), pages 181-189, June.
    16. Zapata, Hector O & Rambaldi, Alicia N, 1997. "Monte Carlo Evidence on Cointegration and Causation," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 59(2), pages 285-298, May.
    17. Awudu Abdulai & Philippe Jacquet, 2002. "Exports and Economic Growth: Cointegration and Causality Evidence for Côte d’Ivoire," African Development Review, African Development Bank, vol. 14(1), pages 1-17.
    18. Tyler, William G., 1981. "Growth and export expansion in developing countries : Some empirical evidence," Journal of Development Economics, Elsevier, vol. 9(1), pages 121-130, August.
    19. Mr. Peter Doyle & Mr. Peter F. Christoffersen, 1998. "From Inflation to Growth: Eight Years of Transition," IMF Working Papers 1998/100, International Monetary Fund.
    20. Fischer, Stanley, 1993. "The role of macroeconomic factors in growth," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 485-512, December.
    21. Irene Henriques & Perry Sadorsky, 1996. "Export-Led Growth or Growth-Driven Exports? The Canadian Case," Canadian Journal of Economics, Canadian Economics Association, vol. 29(3), pages 540-555, August.
    22. Barro, Robert J. & Lee, Jong-Wha, 1994. "Sources of economic growth," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 40(1), pages 1-46, June.
    23. ,, 2004. "Economic History Society Annual Conference," European Review of Economic History, Cambridge University Press, vol. 8(2), pages 225-225, August.
    24. Jung, Woo S. & Marshall, Peyton J., 1985. "Exports, growth and causality in developing countries," Journal of Development Economics, Elsevier, vol. 18(1), pages 1-12.
    25. Granger, C. W. J., 1988. "Some recent development in a concept of causality," Journal of Econometrics, Elsevier, vol. 39(1-2), pages 199-211.
    26. P. J. Dawson, 2005. "Agricultural exports and economic growth in less developed countries," Agricultural Economics, International Association of Agricultural Economists, vol. 33(2), pages 145-152, September.
    27. Granger, C. W. J. & Newbold, P., 1974. "Spurious regressions in econometrics," Journal of Econometrics, Elsevier, vol. 2(2), pages 111-120, July.
    28. Hirotugu Akaike, 1969. "Fitting autoregressive models for prediction," Annals of the Institute of Statistical Mathematics, Springer;The Institute of Statistical Mathematics, vol. 21(1), pages 243-247, December.
    29. Fouad Abou-Stait, 2005. "Working Paper 76 - Are Exports the Engine of Economic Growth? An Application of Cointegration and Causality Analysis for Egypt, 1977 - 2003," Working Paper Series 211, African Development Bank.
    30. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    31. Feder, Gershon, 1983. "On exports and economic growth," Journal of Development Economics, Elsevier, vol. 12(1-2), pages 59-73.
    32. Neri Salvadori (ed.), 2003. "The Theory of Economic Growth," Books, Edward Elgar Publishing, number 2741.
    33. Taylor, Mark P. & Peel, David A., 2000. "Nonlinear adjustment, long-run equilibrium and exchange rate fundamentals," Journal of International Money and Finance, Elsevier, vol. 19(1), pages 33-53, February.
    34. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. David Adeabah & Simplice Asongu, 2024. "Agricultural Export, Growth and the Poor in Africa: A Meta Analysis," Journal of Interdisciplinary Economics, , vol. 36(2), pages 204-223, July.
    2. Sayef Bakari & Sofien Tiba, 2022. "Agricultural Exports, Agricultural Imports And Economic Growth In China," Journal of Smart Economic Growth, , vol. 7(3), pages 35-61, September.
    3. Rita Remeikiene & Ligita Gaspareniene & Artiom Volkov, 2018. "Evaluation of the Influence of the Export in Agricultural Products on the Baltic States Economic Growth," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 14(3), pages 83-94.
    4. Anton Oleinik, 2018. "EOpen Economy or Protectionism: Ukraine’s Dilemma," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 14(3), pages 109-127.
    5. Daniel Francois Meyer, 2019. "An Assessment Of The Importance Of The Agricultural Sector On Economic Growth And Development In South Africa," Proceedings of International Academic Conferences 9912288, International Institute of Social and Economic Sciences.
    6. Barbara Iannone & Giulia Caruso, 2023. "“Sustainab-lization”: Sustainability and Digitalization as a Strategy for Resilience in the Coffee Sector," Sustainability, MDPI, vol. 15(6), pages 1-32, March.
    7. SHIKUR, Zewdie Habte, 2022. "Agriculture And Commodity Export And Its Productivity And Production In Sub-Saharan Africa: Evidence From Time Series Data Of Four Countries," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 22(1), pages 61-76.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yifru, Tigist, 2015. "Impact Of Agricultural Exports On Economic Growth In Ethiopia: The Case Of Coffee, Oilseed And Pulses," Research Theses 265676, Collaborative Masters Program in Agricultural and Applied Economics.
    2. Sayef Bakari, 2017. "The Impact of Vegetables Exports on Economic Growth in Tunisia," Economic Research Guardian, Mutascu Publishing, vol. 7(2), pages 72-87, December.
    3. Sushanta K. Mallick, 2002. "Determinants of long-term growth in India: a Keynesian approach," Progress in Development Studies, , vol. 2(4), pages 306-324, October.
    4. Tarlok Singh, 2010. "Does International Trade Cause Economic Growth? A Survey," The World Economy, Wiley Blackwell, vol. 33(11), pages 1517-1564, November.
    5. Abhijit Sharma & Theodore Panagiotidis, 2003. "An Analysis of Exports and Growth in India: Some Empirical Evidence (1971-2001)," Working Papers 2003004, The University of Sheffield, Department of Economics, revised Nov 2003.
    6. Asmawi Hashim & Norimah Rambeli & Norasibah Abdul Jalil & Normala Zulkifli & Emilda Hashim & Noor Al-Huda Abdul Karim, 2019. "Does Export Led Growth Hypothesis Hold Under World Crisis Recovery Regime in Malaysia?," Research in World Economy, Research in World Economy, Sciedu Press, vol. 10(5), pages 9-19, December.
    7. Adeel Saleem & Maqbool H. Sial & Ahmed Raza Cheema, 2023. "Does an asymmetric nexus exist between exports and economic growth in Pakistan? Recent evidence from a nonlinear ARDL approach," Economic Change and Restructuring, Springer, vol. 56(1), pages 297-326, February.
    8. Sayef Bakari, 2017. "The Three-Way Linkages Between Export, Import And Economic Growth: New Evidence From Tunisia," Journal of Smart Economic Growth, , vol. 2(3), pages 13-53, December.
    9. Bakari, Sayef, 2017. "Why is South Africa Still a Developing Country?," MPRA Paper 80763, University Library of Munich, Germany.
    10. Ana María Cuadros Ramos, 2000. "Exportaciones y crecimiento económico: Un análisis de causalidad para México," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 15(1), pages 37-64.
    11. Jordan Shan & Fiona Sun, 1998. "On the export-led growth hypothesis for the little dragons: An empirical reinvestigation," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 26(4), pages 353-371, December.
    12. Óscar Afonso, 2001. "The Impact of International Trade on Economic Growth," FEP Working Papers 106, Universidade do Porto, Faculdade de Economia do Porto.
    13. Jim Love & Ramesh Chandra, 2004. "Testing Export‐Led Growth in India, Pakistan and Sri Lanka Using a Multivariate Framework," Manchester School, University of Manchester, vol. 72(4), pages 483-496, July.
    14. Khalid Mahmood & Shehla Munir, 2018. "Agricultural exports and economic growth in Pakistan: an econometric reassessment," Quality & Quantity: International Journal of Methodology, Springer, vol. 52(4), pages 1561-1574, July.
    15. Ahmed, Osama & Sallam, Walid, 2018. "Studying the volatility effect of agricultural exports on agriculture share of GDP: The case of Egypt," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 13(8), pages 345-352.
    16. Waithe, Kimberly & Lorde, Troy & Francis, Brian, 2010. "Export-led Growth: A Case Study of Mexico," MPRA Paper 95557, University Library of Munich, Germany.
    17. Turan Subasat, 2003. "Does the Dollar Index Really Measure Outward Orientation?," International Review of Applied Economics, Taylor & Francis Journals, vol. 17(3), pages 309-326.
    18. Renelt, David, 1991. "Economic growth : a review of the theoretical and empirical literature," Policy Research Working Paper Series 678, The World Bank.
    19. Hakan Çetintaş & Salih Barişik, 2009. "Export, Import and Economic Growth: The Case of Transition Economies," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 15(4), pages 636-649, February.
    20. Nasim Shah Shirazi & Turkhan Ali Abdul Manap, 2005. "Export-Led Growth Hypothesis: Further Econometric Evidence From South Asia," The Developing Economies, Institute of Developing Economies, vol. 43(4), pages 472-488, December.

    More about this item

    Keywords

    Crop Production/Industries; International Relations/Trade; Marketing;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:cmpart:243473. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: http://www.agriculturaleconomics.net .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.