International Economics

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Browsing International Economics by Author "Amare, Alemaye"

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    Evaluating Ethiopia’s Agricultural Export Potential: Empirical Evidence Using Gravity Model
    (Addis Ababa University, 2016-11) Amare, Alemaye; Girma, Estiphanos (PhD)
    Both theories and evidences indicates that the large share of Ethiopia’s export is mainly primary/agricultural products. Owing to this fact, this study attempted to empirically figure out what determines the agricultural export trend of Ethiopia with 38 major trading partners over the study period, 1995-2015. The augmented dynamic gravity model has been estimated using system GMM technique where the log form agricultural export of Ethiopia to the major trading partners is the dependent variable. The coefficients obtained are then used to predict the agricultural export trade potentials for Ethiopia. The empirical result revealed that application of dynamic gravity models is likely to produce consistent results where the lagged agricultural export has a positive and statistically significant effect on current agricultural export flows. Apart from this, other traditional gravity model variables such as Ethiopia’s population and home country’s trade openness are found to have positive and significant impact towards agricultural export of Ethiopia. Importing country’s population, distance and home country’s contract intensive money variables as well were found to be significant in affecting Ethiopia’s agricultural export negatively. As far as agricultural export potential is concerned, European countries remained to be the dominant future potential destinations of Ethiopia’s agricultural export. Specifically, agricultural export potential to countries including Israel, Switzerland, Greece, Norway, Finland, Sweden, Romania and Austria are not yet exploited. This implies that export promotion towards these economies has to be prioritized through bilateral trade agreement arrangements and reduction in public sector bottlenecks to exporters.