Economics

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An Analysis of the Relationship between Ethiopia' Foreign Trade and Gross Domestic Product
(A.A.U, 1982-06) Estiphanos, Girma; Suryani, S.(Dr.)
The purpose of the study was to establish and analyze the relationship between Ethiopia's foreign trade (exports and imports) and Gross Domestic Product (GDP). A broader review of published sources was made on all aspects of the problem to be investigated. Based on a priori theoretical knowledge and the nature of the scatter diagram, linear regressions of GDP on exports and imports on GDP were formulated . Regression and correlation coefficients were computed and interpreted with allowances given to non-economic variables. The results showed that there is a strong association between GDP and exports, on the one hand, and imports and GDP , on the other. The relationships were then viewed with due considerations given to policy issues such as structural diversification and economic cooperation and integration.
An Analysis of Household Consumption Patterns in Ethiopia
(A.A.U, 1982-06) Aredo, Dejene; Mulat, Teshome(Dr.)
The point of departure of this study was an examination of the limitations of the traditi onal approach to c onsumption analysis in th e developinG countries. An alternative approach was developed a nd applied t o the socio-economic realities of post-revolutionary Ethiopia. The approache ' permit ted one to a nalyse household consumption patterns of the country fr om different a neles. The st'!lGly suggested that those who are concerned with c nnsumption planning oould be ahle t o contribute more t o the development o f the national economy by reconsidering their approach to the subject.
Industrialization and tariff Protection in Ethiopia
(A.A.U, 1984-05) Mesfn, Melisachew; Mulat, Teshome (dr)
Industrializa tion in Ethiopia is a recent Phenomenon. The Eontribution of the manufacturing sector in terms of GDP, Employment, export earnings , Etc. Is very Small. The manufacturing industries emphasise the production of non- durable consumer goods. in Ethiopia , Tariff Protect ion is an important instrument employed by the government to encourage the domestic industries. the objective of this ,study is, Among other things , ( 1 ) to assess the effectiveness of tariff protection, (2) to identify which industries or group of industries the' policy favors and the Possible consequences of the policy and (3) to estimate the domestic resource cot of saving a unit of Foreign exchange. the findings show that the pattern of protection in Ethiopia Favors consumer goods production. These are the oldest group of industries in the history of manufacturing in the country. However, they are still protected highly. This is a sign of inefficiency. the findings also reveal that tariff rate setting in Ethiopia is a case-by - case approach. There is no branches.. The domestic resource cost estimation shows that the domestic factor endowments do not suit to the production of some products. Protection by itself does not necessarily lead to inefficiency what is important is the dosage and type of industries to be protected.
The Supply Response of Subsistence Peasants: The Case of Tefe-growers in Some Districts of Shoa
(A.A.U, 1984-06) Demeke, Mulat; G/kiros, Fassil (Dr)
In an attempt to assess the supply behaviour of subsistence peas ants , this study concentrated on some teff (Eragrostis teff) growing peasant associations within Shoa Adminstrative Region . The associations were selected on the basis of their open market teff price levels and the necessl1ry information was obtained through a survey based on simple random sampling . Regression and covariance analyses were used for analyzing the data . The result of the production anelysis showed that the peasants are efficient in utilizing the resources (traditional and non-traditional) at their comnand and henc a superior alternative to increase production lies on measures intended to raise the consumption of non- tradional inputs. The analysis of market behaviour also showed that market supply o f teff is an increasing function of output . by and large, the solution to the present food problem seems to be best served by policies which increase investment and improve the incentive structure in favour of the peasant sector .
An Economic Evaluation of Food Grain Marketing and Pricing Policies in Ethiopia.
(A.A.U, 1986-06) Terfassa, Bulti; Aredo, Dejene (Ato)
Food grain marketing and pricing system in the pre- revolution period were analysed in terms of function performed , influence over function and power relations. Comprehensive analysis of addis Abeba, found grain wholesale prices has also been made . the results confirm the monopolistic nature of the system than its competitiveness. The system was incapable of closing the seasonal and temporal gaps in production and consumption . it did not motivate producers through price incentives and market infrastructures. Far reaching institutional changes in the national food grain marketing and pricing system have taken place after the 1974 revolution . The creating for parastatal agency. The agricultural marketing Corporation (AMC) increasing role of service cooperative and “ kebele ‘’ societies in procurement and distribution of food grain are elements of the new system in food grain marketing. The private sector also operate in parallel with the state and mass organizations although it has been subjected to strict control. The elements of the new system have been analyzed by comparing outcomes with declared objectives particularly for the state sector. The results suggest that thre are ample rooms for improvement in the operation of the system before it yields positive results on production . How the new marketing system influence production at the farm level has been analyzed using farm household level data obtained from sample survey. The analysis and results from the data have shown that the supply of consumer goods and non farm inputs, credit relative price of out put to input costs, storage and packing at farm levels, the capacity to remove produce in order to avoid congestion and prompt cost payment for producers upon grain delivery needs improvement if the system has to create positive inducement as producers . producers are also responsive to prices and marketing changes. Based on the assumption of responsiveness of producers prices elasticity of out put has been estimated . the elasticity frame work has been combined with the marshallian economic surplus theory of standard partial equilibrium to study the welfare effects of the prevailing pricing and marketing system . The results show that an increase in production prices will increases demotic production. Besides increasing production, it also conserve the public financial resources reduces subsidy )save foreign exchange and plods the agriculture sector at a pace faster than its moves today.
The Problem or Wage Determination in Ethiopia: A Case Study of the State-Owned Textile Industries
(A.A.U, 1986-06) Amha, Wolday; Mulat, Teshome (Dr)
The objective of this study has been to identify inter' industry and interpersonal wage differential and to explain the determinants of mean wags and individual wares in the state-owned textile industries. The necessary information was obtained through sample survey and secondary sources, The coefficient of variation. Simple range, percentages, standard deviation, coefficient of valuation, Lorenz curve, Gini efficient, multiple linear and semi- logarithmic regression, and principal component methods were used to analyze the data. The results indicate that 1) the institutional variables such as the government legislations and directives influence the wage determination process in the state-owned textile industries . 2) there exists high inter 'industry and interpersonal wage differential. 3) production, profit and fixed assets jointly affect the mean wage differential between the industries. 4) Education and experience within an industry are increasing function of wages. Moreover, the variables sex , marital status, occupation, experience outside the industry, and change of jobs influence the level of wages in the state"' owned textile industries. The paper suggests for the restructuring: of the existing wage system particularly the introduction of wage policy on the needs of the economy not only for the textile sector but also for the whole economy.
A Study of the Factors that Affect the Use of Agricultural Credit among Peasant Farmers in Ethiopia: The Case of Two Districts
(A.A.U, 1987-06) Admassie, Assefa; Mulat, Teshome(Dr.)
A necessary and important ingredient in the development process of subsistence agriculture is the introduction of improved technology and land management practices. But these are related to the availability of suitable agricultural credit facilities. Although several agricultural credit policies and programmes nave been introduced in Ethiopia very few peasant farmers have been integrated in to these programmes. More over ,the proportion of private peasant using agriculture credit has remained unsatisfactory .except for some short-term credit from the Ministry of Agriculture for input procurement';, agricultural credit services available to the peasant farmers are still of a rudimentary nature. In light or these facts, it would be desirable to find concrete explanations for the low level of credit use by subsistence farmers. Consequently, the central objective of t he thesis has been the determinations of both institutional and non-institutional factors which influence subsistence farmers credit use. since the detailed information base necessary to forward a solution to the problem is not readily available , the case study method has been considered to find such details. Towards this end, two districts were purposively selected on the basis of their response to the introduction of improved technology . A random sample of two peasant associations was drawn from each district and from each peasant association selected , a simple random sample of farm household heads was taken .Data were collected in the months of March and April 1986. Both Qualitative and quantitative techniques were used to analyse the stated objectives. In particular , the techniques of discriminate analysis and multiple linear regression analysis have been applied to identify the important socio-economic factors that characterize credit users and non-users and those which determine the volume of loan absorbed by a farm household. 'The result of the study has shown that subsistence farmers credit use has been limited by institutional factors both before the Revolution and after the revolution. the findings also show that peasant farmers ' credit use is also influenced by a set of social and economic factors . The level of education, the use of improved technology , the size of operational area , inadequate market arrangements together with extension service availability and two of the hypothesised production limitations (need for more land and product price security) have been observed to be the main factors which distinguish borrowers from non- borrowers. The age of the farm household head and investment expenses are also important to classify farmers as borrowers or non- borrowers The results of the multiple linear regression analysis have also indicated that the variations in loan size are explained by a set of social- economic variables In this regard, income , credit experience, and value of livestock were found to be the main determinants of loan size . The study reflects that the formulation of an appropriate agricultural credit policy together with other complementary services is important in order to raise agricultural productivity of subsistence farmers in rural Ethiopia .
Measuring Economic Efficiency: A Case Study of State Owned Textile Industries in Ethiopia.
(A.A.U, 1987-09) Gezahegne, Mitikie; Befekadu, Dagefe (Dr.)
An important fact or that would influ ence the success or f a ilul of an industrial concern is the degree of efficiency in the utilizati on of resourc es und er its command. In Ethiopia efficiency is a major problem. Th e r e a r e some evidences to support the contention that resources are being utilized inefficiently. By emp loying the Oeomestic Reso urce Cost (ORe) methodology in general equilibrium settin g . this st udy attempts to empi~iea~ly estab lish the incidenc e of prot ect ion and the magnitude of efficiency in th e state own ed textile industry at a point in time. The major findings are as follows: (a) The system of prot ection provides a uniform nominal protection to all firms (b) The eff ective protection is high and differs substan tially among firms (c) The domestic r esource cost is high and differs subst antially among firms. indicating inefficiency (d) Firms with high domestic resource cost are acco rd ed high protection while firms with low domestic r eso urce cost are offered low protection . This indica t es th a t the Ethiopian system of protecti on encouraged and supported in eff ici e nt firms (e ) Wide differences exist between economic and private profitability among firms . indicating the presence of price pistortions both in the product and fact or markets . The quantitative estimates further indicat e that in a number of cas es the effect of gove rnment policy was not consistent with objective of economic eff ici ency. To enha nce e conomic e ffi ciency i n the State own ed texti l e s ect or. substantial restructuring and polic y r eform is required. In respect t o this. the study identified spec ific areas that deserve the a ttention of policy makers and recommends the measure s to be taken.
Economic Performance and Development of State Farms: A Case Study of the Middle Awash Cotton Producing State Farms
(A.A.U, 1988-06) Ayele, Gezahegn; Suryani, S.(Dr)
This thesis reports on a case study of the middle Awash cotton .. producing farms conducted with the objective of assessing the economic performance of Ethiopia’s state farms as well as identifying the factors affecting such performance. The financial rate of return of the farms as calculated in the study confirms the result of aggregative studies conducted earlier that state farms are heavy financial loosers.However it is also the study,s finding that the same farms have consistently generated ret economic returns over the post seven years.This is experessive of the farm,s contribution to the economy by meeting rat material requirements of domostinc industries and engaging elements of the actively job seeking rural underempoved. The contrast between the farms positive economic returns and Their poor financial performance is mainly expiained by market dis tortions due to the government pricing policy. It also indicates the conflicting nature of the objectives that the government wishes to attain throug!l state farms . It is a second finding of the study that in spite of the current pricing policy: the farms I financial as well as economic rate of return figures would :lave been higher ':hall is the case at present with a more rational use of resources.The current farm management policy is 0ne of excessive centralization and stands in the way of such rational use. The findings of the study should not suggest that state farms understudy are necessarily be the least cost means of obtaining the benefits the farms are current’y generating.
An Economic Analysis of Livestock Marketing: The Case of Cattle Marketing along the Trade Route from Bele (Arssi) to Addis Ababa
(A.A.U, 1988-06) Tsige, Tekaling; Mulat, Teshome
A livestock market study to identify the typology of livestock markets, to estimate marketing margins and mareket participants ' share in the distribution of income from live stock trade and t o identify factors determining cattle prices was made using a case study method . Seven livestock markets, located along the trade route from bele (Arssi) to Addis Ababa, were selected. Data on cattle prices, factors identified to determine cattle prices, market costs and factors specified to characterize market types were collected . Cattle prices were deseasonalized using price indices in order to remove the seasonal component. A semi-log general model was fitted to both adjusted and unadjusted price data in order to see the relationship between cattle prices and factors determining cattle prices. The Chow test was conducted to see whether or not the same type of factors which determine cattle prices are to be found in all types of livestock markets . The results indicate that the livestock markets of the country can be classified as primary , secondary and terminal on the basis of such classificatory criteria as type of market participants , reseasons for purchase , type of cattle marketed , mode of transaction and location of the market place . The share of producers in the final price of cattle was found to be affected by the distance of the location of the producers with respect to the terminal market . Those producers located relatively nearer to the terminal market received higher share than those located far from the terminal market . In the regression analysis, the coefficients of the variables .' ." identified to determine cattle prices were found to be different among market types . It was further noted that the cattle marketing system of the country is inefficient .. due to lack of market information, poor trekking arrangements and inadequate market facilities . The study , therefore , concluded by pointing out policy measures to be pursued in order to promote the efficiency of the domestic cattle marketing system of the country.
An Assessment of the Role of the Commercial Bank in Savings Mobilization and Utilization in Post Revolutionary Ethiopia
(A.A.U, 1989-06) Felleke, Mahtsentu; Teferri, Assefa (Dr)
The main concern of this thesis has been to assess the role of the Commercial Bank of Ethiopia in savings mobilization and utilization. The necessary information was mainly obtained from secondary sources. Simple techniques of analysis such as percent ages, graphical representations, ratios, etc., are used to analyze the data. The results indicate that the performance of the Bank in savings mobilization and utilization has, generally, been inadequate. The in adequacy of the Bank's savings mobilization effort is exhibited by the low levels of the banking ratio, changes in to t a l bank liabilities as percentage of GNP, and by the ratio of bank deposits to money supply. The inadequacy of the utilization of savings is indicated by the absence of clear credit policy, excess liquidity reserve , the declining trend of loan-deposit ratio, and by the high security requirements. The paper suggests some changes in the existing policy of the Bank. Thus, both lending and deposit interest rates, credit and branch expansion policy, and security requirements have to be changed in order for the Bank to play the maximum role in the growth of the Ethiopian economy.
The Role of Metal Industry in the Ethiopian Economy and Factors Influencing its Productivity
(A.A.U, 1989-06) Regassa, Teferi; G/Kiros, Fassil (Dr)
The purpose of this thesis is to examine the relative importance of the metal industry in the Ethiopian economy and productivity situation in the metal factories. In the pursuit of the former objective. the historical development and the role of the metal industry in different socio-economic netting vis-a-vis the Ethiopian reality were analyzed. To achieve the latter objective. Economic and non-economic factors influencing productivity have been analyzed. Based cr. the findings. attempt has been made to make relevant policy ::recommendations in order to : improve the role and map out the strategy for the development ment of the sob-sector and improve the facto' use efficiency of the sub-sector. The problem has arsines because of the little recognition and support: provided to the sub-sector in Ethiopia. The results of the study indicate that the successful development of the sub-' sector plays a key role in the economic and social progress of a country . Although the potential role of the sub-sector is important in the Ethiopian economy, :it is still by far lower than the role of the sub-sector in different economic settings. It is also found that the sub-sector has increasingly become associated with high cost of production. It therefore pays to focus on the strategy for the development of the sub-sector and the removal of all managerial and operational bottlenecks to progressively improve and make the industry more profitable.
Foodgrain Production in the State and Peasant Farm Sectors: A Case Study of Cohparative Economic Perforhance in Arsi Region
(A.A.U, 1990-06) Abmed, Sufian; Mulat, Teshome (Dr)
In this study an attempt is made to measure and compare the economic performance of state and peasant farms through a case study method . The economic performance of five state farms in Arsi are compared with that of five peasant associations in the same region. The principal sources of information for this study are the primary data generated at farm level. Various criteria are used to compare the performance of the two farm categories. The empirical results of the study reveal that despite all the priorities they enjoy, state farms are performing poorly relative to the traditional peasant farms. The root causes of inefficiencies in the state farms are identified. Finally, recommendations are made to improve efficiency in the state farms.
The Budgetary Impact of Import Tax Reform in Ethiopia
(Addis Ababa University, 1994-06) Midekssa, Mesfin; Chole, Eshetu (PhD)
Ethiopia is currently i mp lement i ng a s ructura l adjustmen . program. The program part l y deals wi th reduci ng the overall fis cal deficit. Tariff reform is one aspect of the package of trade pol i cy measures env i saged . Tar i ff reform a i ms at lower ing the average tariff rate in order to cease dis crim i nation against private sector imports and at rationalizing the protect i ve s ystem . However, since tariff reduct i on is undertaken during a per iod of structura l adjustment , the potential loss of tax revenue from lowering tariff rates is an i mportant issue which needs special consideration . The major objectives of this study are to estimate the effect of changes in the import tax system on total tax revenue and on other key macroeconomic variables, and to forecast the future tax revenue due to a recent (1993) system change in the import taxation. The main findings are that due to a recent tariff reduction, i mport tax and total tax revenue will decline in the future . This reduction in tax revenue, ceteris paribus , will in turn increase the overall fiscal deficit. Revenue losses arising from tariff reduction must be compensated by other sources of tax revenue . In th i s case, the re commended measures to offset the loss are , moving the exempted items to lower tariff rates , broadening the domestic t ax base (particu l ary introducing a single stage sales tax on goods previously exempted from domesti c tax payment ) and improv ing administrative capability to el i minate evasion.
Economic Performance of Ethiopia (1972-1995): Growth Determinants and Implications
(A.A.U, 1996-05) Chane, Seyoum; Demeke, Mulat (Dr)
An assessment of the Ethiopian economy indicates poor performance of the commodity producing sector most notably agriculture, low domestic sayings, weak private investment, extremely low foreign investment inflow, deterioration of living standards, unemployment and poor social and physical infrastructure. This paper looks into the performance of the Ethiopian economy over the period 1971172- 1994/95. Looking into the empirical determinants of the Ethiopian economic growth (or the likely causes of the inadequate long term record growth) during 1968-1995 the result indicates that growth of population, share of government consumption to GDP, and growth in money supply affect GDP per capita growth negatively. Variables as lagged ratio of agricultural output to real GDP, real export growth, percentage change in real effective exchange rate, and share of real trade balance in real GDP on economic growth are found to be a significant contributing factors for the economic growth. In contrast growth of capital formation (substantially dominated by government investment), and human capital showed no evidence that explains at least the poor growth performance, which may be attributed to the measurement problems. The paper further concludes that the specification for testing the possible export growth nexus through its direct and beneficial externality effects on the rest of the economy has shown no evidence and has no satisfactory explanatory power. It follows that policies that favorably affect the agricultural sector; reduce government consumption (with out reducing government investment); maintain external competitiveness; improve real effective exchange rate; create conducive environment for private sector investment, foreign capital inflow, and export diversification; slow population growth, and encourage human capital development are found to be important
The Effect of Devaluation on Major Macro Variables (The Ethiopian Case)
(A.A.U, 1996-06) W/Michael, Sentayehu; Abadi, Taddesse (Dr)
A Time series econometrics technique especially error correction Method employed for analyzing the efficiency of devaluation on Ethiopian economy. Secondary data was collected for the period 1964-1965 from different publication and government office . Edward's real exchange, current account and output model adopted for the study; moreover, Elbadawi' s real exchange and price model was applied for the study. The result confirmed that devaluation could not lead to stagflation circumstance. It was rather expansionary (increasing output and employment) and inflationary. The result of this study adheres the view of that when initial condition of the economy at real exchange appreciation, nominal devaluation could accelerate the process of convergence towards its equilibrium. Devaluation improved the current account balance because of the increment of aid to the country after devaluation; however, it did not improve the trade balance due to the fact that the premium declined considerable degree but not abolished.
A Conceptual and an Empirical Study on the Determinants and the Possibility of Sustained Growth in Kenya
(A.A.U, 1996-06) Cheptoo, Amos; Ahma, Wolday (Dr.)
This paper is a general empirical study on the determinants and the possibility of sustained growth for Kenya. Some determinants were regressed on investment, agricultural output, growth in the service sector, net capital inflow, and growth in exports. It concludes that financial deepening, outward orientation, foreign capital inflow, human capital development and service sector growth have a strong positive link to better economic performance. Population size, political disruption and adverse terms of trade are lethal to growth. The paper further reveals the substitution between economic prudence and donor funding, held responsible for current economic achievements. This is attributed to donor conditionality and competitive multi-part} politics which forced the government to clean up economic mismanagement and built a reputation. This can only be maintained if policies are incessantly consistent without reversal.
Analysis of Budget Deficit and its Structural Determinants in Ethiopia
(Addis Ababa University, 1996-06) Tsegaye, Deressu; Mulat, Teshome (Prof.)
Immediately following he ecl r ion of socialism in he coun try in 1975 , b o th governmen revenue an ex en i ure inc r eased substantially . Nevertheless , the grow h of government expendi ture was not matched by growth of revenue hence persistent and large budget deficits b ecame the feature of Ethi opian economy . In the face o f growing budget deficits the military government made no attempt to control its expenditure but relied up on continuous increase in tax rates, introduction of new taxes and manipulation of t h e ceilings imposed on government borrowing from domesti c sources . Th i s study examined whether the structural factors hypoth e si sed by Morrison (1982) are responsible f or the growing b udget d e fi ci t . The es t imated regression results show that in the l on g r un government budget deficits is likely to increase the higher i s t h e degree of government involvement in the economy the l ess exercise control over expendi ture, the hi gher i s revenue instabili ty and the lower is growt h in government revenue. However, the hypothesis that budget deficit decrea ses as economy grows is not supported . In the short run i t ~ s only growth in governmen t revenue tha t is found to explain the deficits . Al though the recent p oli cy of the Transi tional Government of Ethi opia planned to decrease the b udget defi ci ts , this objecti ve was not attained due to the reduction in tax rates . \ Moreover , the introduction of the regional adminstration led to the duplicati ons of government bureaucracy thereby pushing up the expenditure level.
A Conceptual and an Empirical Study on the Determinants and the Possibility of Sustained Growth in Kenya
(Addis Ababa University, 1996-06) Kipronoh, Amos; Ahma, Wolday (PhD)
The Behaviours and Dynamics of the Real Exchange Rates of the "Birr" (1960-1991)
(A.A.U, 1996-06) Berhanu, Andualem; Abadi, Taddesse(Dr.)
Based on ERHS data, the study used two-step dynamic nonlinear panel data model to analyze poverty dynamics, the implication of shocks and informal risk sharing strategies on poverty dynamics. The model better explains the dynamic process of rural poverty in Ethiopia, which reveals the existence of true state dependence. Size of land owned, number of oxen, male headship and higher educational attainments reduces the risk of poverty. Only drought s’= Ock and death experienced betweenI977-1983 E.C. have long-term impact on poverty dynamics, whereas the impact of idiosyncratic shocks is wiped-out shortly. Many of informal risk sharing strategies significantly reduce current poverty. But in the long-tem receiving remittance and food gift prolongs poverty. While lending to others and membership in Eqqub have poverty reducing impact both currently and in the long-tem.

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