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Export Performance and Determinants in Ethiopia

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  • Menji, Sisay

Abstract

In this study analysis of factors affecting export supply of Ethiopia, during the period 1981 – 2004, have been made using co integration analysis. Data trend reveals that Ethiopian export performance was highly volatile during the period, on average merchandise exports have been growing at 7% per annum, while manufacturing exports were growing at 4% per annum. The trend also reveals that Ethiopia’s export sector is mainly dominated by few primary commodities, where manufacturing exports account for less than 15% of merchandise exports on average. The two models estimated depict that merchandise export volumes are significantly influenced by gross capital formation (proxy for production capacity) and share of trade in GDP (proxy for trade liberalization) while other variables; terms of trade, real effective exchange rate, foreign income, and foreign direct investment were found to be insignificant. Manufacturing exports equation reveals an interesting result, manufacturing exports supply was found to be negatively & significantly affected by foreign income. Similar to merchandise export results, manufacturing exports were also found to be positively affected by gross capital formation. Terms of trade, real effective exchange rate, share of trade in GDP, and foreign direct investment were found to be insignificant. The study concludes with recommendations to increase share of manufactured exports and diversify export base of the country.

Suggested Citation

  • Menji, Sisay, 2010. "Export Performance and Determinants in Ethiopia," MPRA Paper 29427, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:29427
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    References listed on IDEAS

    as
    1. Balogun, Emmanuel Dele, 2007. "Exchange rate policy and export performance of WAMZ countries," MPRA Paper 6233, University Library of Munich, Germany.
    2. Marco Fugazza, 2004. "Export Performance And Its Determinants: Supply And Demand Constraints," UNCTAD Blue Series Papers 26, United Nations Conference on Trade and Development.
    3. Lawrence Edwards & Phil Alves, 2006. "South Africa'S Export Performance: Determinants Of Export Supply," South African Journal of Economics, Economic Society of South Africa, vol. 74(3), pages 473-500, September.
    4. Freund, Caroline & Rocha, Nadia, 2010. "What Constrains Africas Exports?," CAGE Online Working Paper Series 16, Competitive Advantage in the Global Economy (CAGE).
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    Cited by:

    1. Samwel J. Kabote & Jires Tunguhole, 2022. "Determinants of clove exports in Zanzibar: Implications for policy," WIDER Working Paper Series wp-2022-54, World Institute for Development Economic Research (UNU-WIDER).

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    More about this item

    Keywords

    Export Growth; Merchandise Exports; Manufacturing Exports; Error-Correction (Co-Integration) Method;
    All these keywords.

    JEL classification:

    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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