Browsing by Author "Estiphanos, Girma (Dr)"

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    Assessing the Impact of Non-Reciprocal Trade Preferences: the Case of African Growth and Opportunity Act (Agoa) and Subsaharan Africa's Agricultural Exports to the United States of America
    (A.A.U, 2008-06) Gebregiorgis, Kokeb; Estiphanos, Girma (Dr)
    The purpose of the paper is to discuss and analyze the impact of Non Reciprocal Trade Preferences the case of African Growth and Opportunity (AGOA) on the agricltltural exports of Sub Saharan .4frica. That is its aim is to show whether the AGOA has increased agricultural exports from SSA to the United States of America. The researcher employs both descriptive and empirical analysis approaches. Pre and Post AGOA agricultural export performance of Sub Saharan are among descriptively analyzed issues. For empirical analysis part, we employ the fixed effect gravity model of international trade. We take three samples the first is a sample of 46 SSA countries, Secondly a sample of 30 countries whose average yearly agricultural exports is >= 500,000 US dollars and finally a sample of 9 major agricultural exporters in SSA countries. The period of time covered under the study is from 1996• 2007 which is 5 years before the enactment of AGOA and the rest 7 years post AGOA period. Our descriptive evidence shows that the AGOA has had insignificant impact on the agricultural exports of Sub• Saharan Africa. Similarly the empirical estimates shows for the first sample with 46 SSA countries AGOA has led to a decline in average exports of SSA by 19%, for the second sample with 30 SSA countries whose yearly average agricultural exports is >= $ 500,000 AGOA has led to an increase in agricultural exports approximately by 35% on average, while for the third sample, major agricultural exporters, averagely AGOA has led to increase in agricultural exports approximately by 18%, but in all the three samples considered the AGOA dummy was not statistically different from. zero. Therefore, one may conclude that AGOA has induced neither an increase nor a decline in SSA agricultural exports to the US.
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    Economic Effects of Progressive Air Transport Liberalization in Africa.
    (A.A.U, 2007-07) Abera, Megersa; Estiphanos, Girma (Dr)
    Empirical analysis on economic effects of liberalization in the context of African air Transport sector is not much discussed in the literature and the continent's policy makers and The industry operators need such analysis to implement liberalization initiatives. As such, The Purpose of this study is to empirically measure economic effects of progressive air transport liberalization in Africa by taking the case20city-pair routes to/from Addis Ababa for the Period 2000-2005. by employing a Two-stage least square estimation procedure for a Panel data set, passenger demand. fare and departure frequency models are estimated to see the impact of bilateral air service agreement (BASA) liberalization. Liberal policies are assumed to affect the two supply side variables i.e. fare and departure frequency. accordingly, The frequency model indicates that a significant increase in departure frequency is observed in routes that experienced both ' full' and 'restricted ' type of liberalization compared to those governed by restrictive bilateral arrangements. in Addition. Higher increase in the number of departure frequency in routes which experienced restricted liberalization relative to those operated under fully liberalized arrangement is observed. regarding the fare model, a statistically significant negative impact of liberali zation policy on standard economy fare is not found . Finally, It is recommended that liberali zing BASAs, Especially Provisions Pertaining to departure frequency will enhance service quality.
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    Ethiopia's Access to the WTO with Emphasis on Foreign Market Access
    (A.A.U, 2006-07) Bulto, Wolde; Estiphanos, Girma (Dr)
    The purpose of the thesis is to discuss and and analyze effects of WTO accession on Ethiopia’s economic policy making with particular emphasis on foreign market access for her exports 'That 'is its aim is to ask how important market access might be as an incentive for Ethiopia to join the WTO. Assessing Ethiopia's effective utilization of already granted p referential market access iS also another major objective addressed in the paper. The paper also discusses the costs and benefits to be expected by Ethiopia if she accedes [Q the WTO. We employ bod1 descriptive and empirical analysis approaches. T rends of Ethiopia's exports by major destinations, Ethiopia's utilization of preferential market access, and major consequences of policy changes as a result of joining the WTO arc among descriptively analyzed issues. For en1pirical analysis part, we employ the gravity model of international trade and include data on 31 of Ethiopia's trade panniers. The empirical analysis is done using two sample periods-(I 995-2003) and (2000-2003 )-to observe the effects of recent preferential market accesses-AGOA and EBA initiatives. T o enable us to draw sound conclusions from empirical results, three trade policy indicators are used. These are Heritage Foundation Index of distortions in international trade Economic Freedom of the World international trade index and trade dependency ratio of Ethiopia's trading partners. European Union (EU) member countries, COMESA member countries, Saudi Arabia, united States (US) and Japan are major importers of Ethiopian exporters. in addition to the Generalized System of Preferences (GSP), European Union g ranted Ethiopia preferential market access under EU-ASP economic partnership (Coronal! Agreement) and EBA initiatives. United state also offered preferential market access for Ethiopia under AGOA, However, it is found that Ethiopia’s utilization of these preferential market accesses IS not satJsf.1crorr. Without taking these preferential market accesses into account, our empirical estimates show that import barriers imposed by Ethiopia's trade partners do not play an important role in determining the volume of Ethiopian exports, Therefore, the results suggest that the most favored nation mechanism and putative improved market access might not be an important criterion for deciding Ethiopia's Accession to the WTO. Hence, he should demand long-enough periods both for accession process and transition period to address her supply side problems.
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    Foreign direct investment in Sub-Saharan Africa and its contribution to economic growth
    (A.A.U, 2001-06) Bekele, Mekonnen; Estiphanos, Girma (Dr)
    The first objective of this paper is an ex-post approach that tests the pull-side determinants of FDI inflows into SSA countries during the last two decades. To attain this objective, cross-section multiple regression analysis is employed over three sub-periods (1980-84,1985-89 and 1995-1999), by treating five years average values of the both the dependent variable (per capita FDI inflows) and the theoretically postulated explanatory variables. For this purpose, thirty-four SSA countries are included in the sample of the study. From the estimated results, the most important determinant variables are natural resource potential, infrastructure, real GDP per capita (market size), exchange rate variability and the rate of inflation. The first three variables are playing positive role in attracting FDL whereas the latter two are playing a negative role. Lending interest rate, cost of labor and the degree of openness are the factors that have negative relationship with FDI inflows in addition to the above variables during the first period, while weak governance has negative impact for the second period. In the third period, political instability, fiscal deficit, labor cost and corruption are factors that negatively affect FDI inflows. Due to the multicollinearity problem, the alternative use of human capital in place of income (during 1980-84 and 1995-99), and measure of the degree of openness in place of the natural resource potential (during 1995-99), both explained the FDI inflows positively. Interest rate was significantly determining FDI inflows into the SSA countries only during the period of high level of joint venture FDJ Unlike the early periods of 1980-84, in the recent period of globalization, relatively more open countries attract higher FDJ Under the hitherto circumstances, debt burden (unlike other developing regions) has played little role in hampering FDI, and tax incentives have little impact in attracting FDI for SSA countries. The second objective is concerned with testing the impacts of FDI on the economic growth of SSA countries directly, and through its impact on gross domestic saving, indirectly. To this end, simultaneous equation model in panel data is estimated by treating growth of output and gross domestic saving as endogenous variable and lagged value of FDI and other variables as exogenous variables. Data from twelve SSA countries over the period of 1987-98 was used for this test. The estimated result shows that FDI has negative but insignificant direct and total effect on the growth of output of the sample SSA countries, but it has positive indirect effect on the growth of output through domestic saving. As the assumption of efficient market and perfect mobility of factors of production doesn't hold in for the SSA countries, the impact of FDI on economic growth is unsatisfactory.
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    Impact of Trade Liberalization on the Government Tax Revenue of Ethiopia by Reducing the Tariff Rate: Using a Simple Commutable General Equilibrium Model
    (A.A.U, 2008-07) Berhane, Kahsay; Estiphanos, Girma (Dr)
    1999 was the time the military regime relinquished political power and the new government took over the power. The new government initiated a wide range of reform programme some of which are directly related to trade liberalization In this paper a two-sector , three-goods simple computable general Equilibrium (1-2-3 CGE) model, developed by S .Devarajan et.al. at the the reduction of the tariff rate in three scenarion on government tax revenue and saving of Ethiopia. Moreover, it examines the coordination of domestic tax and trade tax with out affecting the total tax revenue of the country using the 1-2-3 CGE model. The simulation result of the model when reducing tariff rate is an overall decline of the government tax revenue and government saving of the country in the three different scenarios. Furthermore, by increasing domestic tax it possible compensate the loss from tariff reduction with out affecting the total government tax revenue.
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    The Link between Financial Development and Economic Growth in Ethiopia
    (A.A.U, 2012-06) Tesfaye, Roman; Estiphanos, Girma (Dr)
    The Link Between Financial Development and Economic Growth in Ethiopia Roman Tesfaye Addis Ababa University, 2012 The paper examines whether a long-run relationship between financial development and economic growth exist in Ethiopia, It employs Co-integrated Vector Autoregressive (CV AR) approach to asses how the financial sector contributes to growth, It further used the granger causality test so as to find the direction of causal ity between financial development and economic growth, Impulse response and variance decomposition tests are also applied so as to see the interaction between financial development and economic growth, The study utilized time-series data of Ethiopia over the period 1980-2010, The findings support the existence ofa uni-directional causality from economic growth to financial development. The emperical evidence, in addition, shows the presence of positive and significant long-run relationship between financial development and economic growth and an insignificant effect in the short-run, The results of Impulse response and variance decompositions also indicate the permanent effect of financial development on economic growth, The policy implication is that long-run policies of financial development are believed to provide significant effect on economic growth
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    Modeling the Principal Export Commodities of Ethiopia (1970/71 - 2003/04)
    (A.A.U, 2006-07) Aberra, Kassahun; Estiphanos, Girma (Dr)
    This study endeavored to model the principal export commodities of Ethiopia such as Coffee Oilseeds. Khat. Pulses. Hides and Skins, Other exports and manufactured exports using time series data/form 1970/ 71-2003/04. Since Ethiopia is price taker in the international commodity market, emphasis is made to the supply side of the model. In addition, as the sample size we employed is not sufficient to undertake the Johansen multivariate estimation technique, the short run and the long run parameters are estimated using Engle- Granger error correction method. The estimated models exhibited that export sector performance is highly vulnerable to . Environmental shacks like rain/all in both short run and long run equations. The external shocks such as terms of trade deterioration has also been scrutinized to be the fundamental factor in determining the real principal commodity exports of Ethiopia in both short run and long run equations. Similarly the real elective exchange rate index (REER) has been important variable in most of the equations. Real intermediate imports which is comprised of raw materials, semi finished goods and capital goods has been also found to be key factor for real manufactured exports which is highly import intensive with 87 percent of raw material demands meet from imports. on the other hand. the variable representing the influence of the road network on export supply (TRL) has the expected sign for all the commodities although it is significant only Jar Chat, Hides Skins and Oilseeds exports. Negative relationship between real exports of coffee and real exports o/Hides and skins has been observed with the exchange rate gap disclosing that when the gap widens export supplies of these commodities will be slumped. Errors and omission, fertilizer sold. domestic consumption, real agricultural production, international trade loan for export are vital variables in determining real export of commodities. The repercussion of these results is the importance of diversifying the export sector both geographically and commodity wise. The commodity diversification should be also embarked on both horizontally and vertically. The Importance real effective exchange rate calls lip also the real depreciation the Birr is imperative for competitiveness of all commodities that Ethiopia is exporting for the interactional markets.
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    A Simulation Analysis of the Impact of Phasing - out of Export Subsidies by the OECD on Sub - saharan Exports: The Case of Animal and Animal Products
    (A.A.U, 2007-07) Makonnen, Tewodros; Estiphanos, Girma (Dr)
    This study is set out to simulate the impact of phasing out of export subsidies by the GECD on the exports of animal and animal products in Sub-Saharan Africa. The global trade of animal and animal products has been increasing Significantly over the past 20 years although the share of SSA has been low. The number of SSA countres that are net importers of animal and animal products has increase over the years owing to a large increase in imports of animal and animal products among themselves and with the rest of the world. The simulation analysis in the paper is done using two models. The first model is ATPSM and is developed by FAG and UNCTAD for the purpose of simulating trade policies. 1t is a partial equilibrium static model. The first scenario to be simulated is 36% reduction in market access, 21% reduction in domestic support and a 100% reduction in export competition. The results reveal that this would result in a 7% increase in exports of animal and animal products by SSA countries. For the second scenario only the phasing out of expo'-t subsidies by 100% was wl1en and this resulted in a 2% increase in the exports of animal and animal products by SSA. The second model is an export model estimating using a panel data from 42 SSA countries and 21 years. This model tal1es production capacity, domestic price index, price of exports, export price of trading partners and income of trading partners as explanatory variables to determine exports. Although the theoretical framework defines a simultaneous estimation, test for endogeniety indicated that the model should be estimated with GLS. After estimating with a panel corrected standard errors the results of the model showed that the only variables affecting the value of exports are real GOP (substituting production capacity) and unit value of exports (substituting for price of exports). Given the result from the two models it can be seen that the changes in trade policies by GECD countries doesn't significantly c1wnge tile exports of the SSA countries. This calls for-more inward 100l1ing policies where it becomes imporetant to enhance production capacity and improve institutions and infrasinucture.
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    Trade Liberalization and Patterns of Trade in Sub-saharan Africa: A Panel Data Analysis
    (A.A.U, 2010-05) Lachisa, Gidisa; Estiphanos, Girma (Dr)
    This paper examines the impact of trade liberalization on sectoral export performance of Sub-Saharan Africa countries using export supply function between the periods 1980 to 2006. The underlying base of the study is the theoretical justification that trade liberalization will lead countries to specialize and export commodities of their comparative advantage. A static panel data analysis based on fixed effect and random effect model was adopted. The main findings are while trade liberalization has a significant positive impact on manufactured export performance; its impact on primary commodity export performance is not worth mentioning. Production capacity of countries in SSA is important factor for the export performance of countries both at aggregate and disaggregate levels. The other explanatory variables are more important in explaining the manufactured export performance.