Browsing by Author "Yayo Mengesha"

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    Trade Effects of Regional Economic Integration in Africa using Disaggregated Data: The Case of Southern Africa Development Community (SADC)
    (A.A.U, 2009-05) Yayo Mengesha; Estiphanos Girma
    Empirical studies on regional economic integration process in Africa exhibit sluggish progress and there by limited level of intra trade. The existing literatures in Africa, particularly in Southern African regional integration bloc, SADC have neglected effects of regional economic integration dealing with disaggregated data. This study analyzes trade creation and diversion effects of the Southern Afi"ican Development Community (SADC) using disaggregated data from 2000 to 2007. The investigation estimates an augmented gravity model using panel data and random effect estimator methods applying instrumental variables where needed. The results show that the intra -SADC trade is growing in fuel and minerals, and heavy manufacturing sectors while it di!>plays a declining trend in agricultural and light manufacturing sectors. This implies that SA DC has displaced trade with the rest of the world in both fuel and minerals, and heavy manufacturing sectors. SADC has served to boost trade significantly among its members rather than with the rest of the world. Countries participating in SADC have moved toward a lower degree of relative openness in these sectors trade with the rest of the world. However, the increasing trend of extra-SA DC trade bias over the sample period in both agricultural commodities and light anufacturing sectors means that there has been a negative trade diversion effect. In other words, the value of trade between members and non-members has been increasing (and not falling as would be the case with trade diversion) for the two sectors. These results seem to suggest that SADC countries retained their openness and outward orientation despite they signed the trade protocolfor enhancing intra-SADC trade.
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    Trends and Drivers of Current Account Balance in Ethiopia
    (A.A.U, 2022-07) Geremew Birhane; Yayo Mengesha
    A country's current account balance is an important leading indicator of its economic health. It comprised of „goods and services‟, „income‟, and „current transfers‟ sub components. The main aim of this paper was to investigate the trends and drivers of current account balance of the Ethiopian economy. The study examined the trends and drivers of Ethiopia's current account balance using annual data from 1990 to 2019. This study used both descriptive statistics and econometric methods to estimate and analyze the drivers of current account balance on Ethiopia‟s economy. The ARDL bounds testing approach to co-integration analysis was used in the study to establish the long run relationship between the relevant time series variables under investigation. The empirical findings of study revealed that the coefficients of parallel market premium, average oil price and degree of openness, and real GDP per capita income growth were statistically significant. Conversely, the coefficients of the variables like real effective exchange rate, fiscal budget balance and financial deepening were found insignificant in the long run. The Current account balances as a major policy variable has positive and significant effects at first difference on Ethiopia‟s current account performance in the short run. In the Ethiopian economy, the current account balance is deteriorating, indicating a significant financial need that could increase the country's international indebtedness and reduce its international reserves. Likewise, the ECM term was statistically significant in determining current account balance disequilibrium adjustment in the short run. Therefore, the study's policy implication is that large amounts of government spending are required to expand infrastructures, which are supposed to increase private investment, particularly in the manufacturing and export sectors.