Economics

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A normal-Weighted Exponential Stochastic Frontier Model
(A.A.U, 2022-06-15) Misgan Desale; Adane Tufa (PhD)
This thesis introduces a new stochastic frontier model called a normal-weighted exponential stochastic frontier model. We have derived a closed form log-likelihood function and JLMS inefficiency estimator of a normal-weighted exponential stochastic frontier model. In addition, we have derived the gradient and hessian matrix of a normal-weighted exponential stochastic frontier model. A Monte Carlo (MC) simulation is carried out to verify the correctness of the derivations, of a normal-weighted exponential stochastic frontier model, and to study the finite sample properties of maximum likelihood estimator. Our simulation result shows that a normal weighted exponential stochastic frontier model performs well compared to a normal-exponential stochastic frontier model. In our simulation result, it shows that as sample size increases the bias and standard errors decreases. Moreover, a real data application is performed, and it is about estimation of carbon efficiency of manufacturing firms in Africa. We have estimated an input requirement production function, using fuel consumption as dependent variable and output and other inputs as independent variables. Our estimated result shows that the estimates of coefficients are the same across models. However, there is differences in carbon efficiency estimates of manufacturing firms. Using a normal-half normal stochastic frontier model, a carbon efficiency of manufacturing firms in Africa gives an estimate ranging between 1.002344 (99.8984%) and 1.002362 (99.8976%). For a normal-exponential stochastic frontier model the range of carbon inefficiency estimates are between 1.074752 (97.5092%) and 1.090364 (96.3126%). Similarly, for a normal-weighted exponential stochastic frontier model the carbon inefficiency estimates are between 1.122895 (95.0907%) and 1.237519 (91.1602%). We have used the carbon efficiency estimates to rank African countries and Egypt is the most carbon efficient country in Africa. We have also run a multiple linear regression on carbon inefficiency estimates to see the determinants. In all three stochastic frontier models: top manager work experience, obstacle to access finance, firm size, export status, and foreign ownership are the key determinants.
A Path to Low Carbon and Climate Friendly Transport Sector in Addis Ababa: System Dynamics Approach
(AAU, 2023-06-18) Kaleab Enyew; Mengesha Yayo (PhD)
Urban transportation system is a complex system with multiple variables and nonlinear feedback loops and influenced by transportation, social, economic, and environmental factors. Conventional transportation modeling approaches are unsuitable to simulate and evaluate its performance. This paper presents a system dynamics approach based on the cause-and-effect analysis and feedback loop structures. The proposed SD model comprises population, economic development, number of vehicles, environmental influence, travel demand and transport supply. The model runs in Vensim PLE software using the data from Addis Ababa, Ethiopia. The impacts of different policy scenarios on transportation system related carbon emission are analyzed. Ban imports of used vehicle, Energy shift and setting emission standard have the capacity to reduce carbon emission with the magnitude of 17%, 59% and 43% respectively by 2030. The study suggests that a combination of policies to achieve a low carbon and climate-friendly transport sector which will result a 74% decrease in carbon emission by 2030
A System Dynamic Analysis for Cement Production and Carbon Emissions in Ethiopia
(AAU, 2023-06-01) Shimelis Fikre; Alemu Lambamo (PhD)
Cement production in Ethiopia is backbone for economic development by constructing large projects such as Grand Ethiopian Renaissance Dam (GERD), Mega Projects, road, etc. Conversely, the concentration of CO2 emissions from cement sector is challenging issue to future climate changes. Over time the demand for cement is increasing for housing and infrastructure development, while the productivity of cement production among the factory is yet poor. Most cement industry in Ethiopia use combustion of imported fossil fuels. However, these leads to high concentration of CO2 emission, productions inefficiency, high cost of operations, loss of productions due to various problem such as shortage of power, spare part, etc. and vulnerability to climate change severity in Ethiopia. This study simulates and develops System Dynamic Model for cement sector to explore endogenous behavior of variables within the model, using Causal Loop Diagram and Stock-Flow Diagram. According to simulation of this study, at end of 2030 the CO2 emission from cement industry is more than double, about 8.92mill. tonsCO2 as compared to 4.37 mill. tonsCO2 in 2022, as well cement production also doubles at the end of 2030 about 16.28 mill. tons. Thus, depict that the carbon emissions proportionally increasing with cement productions. Therefore, the study recommends to utilizes alternative renewable energy resource and modern technological kiln processor to improve their energy efficacy and more productive as well as cope environmental burden of carbon emissions from cement sector of Ethiopia.
Access to Bank Loans, Income Distribution and Economic Growth in agent Based Modeling: Evidence from Evolutionary Perspective
(Addis Ababa University, 2017-06) Atnafu, Gebremeskel; Almas, Heshmati (Prof)
This doctoral dissertation consists of three inter-related studies which constitute its main text, with introductory and summary chapters. The three main studies share a common feature in that they investigate the link between access to bank loans, income distribution and productivity growth. The second chapter is a theoretical framework that uses agent-based computational economics (ACE) to detect the link between access to bank loans and functional income distribution. The third chapter uses Ethiopian firm-level and national income data to validate the second chapter. The fourth chapter investigates the effect of functional income distribution on productivity growth from an evolutionary economic perspective. The second chapter (first study) focuses on Dosi et al.’s (2013) agent-based model which assumes that a well-functioning banking system exists and that industries are composed of both capital and non-capital goods’ producing sectors. As such, monetary policy has a minimal role in impacting functional income distribution leading to an active use of macroeconomic policy. Chapter 2 modifies this model to capture the realities of developing countries where the banking system’s supply of services is smaller than what is considered optimal. The system is heavily influenced by inside agents and industries are dominated by non-capital goods’ producing firms.The modified model theoretically links firms’ access to bank loans and functional income distribution in agent-based modeling. The results based on the modified model indicate that when firms have access to bank loans, functional income distribution improves. Unlike many firm level studies which focus on the firms per se, Chapter 2 argues that it is possible to utilize firms’ economic actions and their access to bank loans to explain how income inequalities are generated and evolve over time. Theoretically the chapter finds that personal income distribution is an emergent phenomenon. This result is in agreement with Thomas Schelling’s ‘Micromotives and Macrobehaviour,’ where he established aggregate behavior as an emergent phenomenon. Its major conclusion is that access to bank loans at the firm level improves income distribution in society. The third chapter (second study) empirically validates the theoretical results obtained in Chapter 2 (first study). It employs the descriptive output and econometric (external as is usually said) validation techniques as an indirect identification strategy to examine the link between access to bank loans and income distribution. It uses data from the Ethiopian Central Statistical Agency (CSA) on medium and large scale manufacturing and national personal income distribution data from the Ethiopian Ministry of Finance and Economic Development (MoFED). Its major conclusions are: (i) firms’ access to bank loans is one mechanism through which income distributional issues can be explained, (ii) firms’ financial structures matter, that is, whatsoever the source of funds, if they are used as investments in fixed capital, the functional income distribution improves, and (iii) functional income distribution is strongly associated with personal income distribution. The chapter will contribute to policy and also enrich the limited literature on the finance-inequality relation. The fourth chapter (third study) links functional income distribution to productivity growth. Its main focus is on examining how functional income distribution can influence the evolution of productivity thereby promoting economic growth. It employs Nelson and winter’s (1982) evolutionary economic framework, evolutionary theory of economic change and the subsequent developments in the field of evolutionary economic modeling. These are used jointly with the evolutionary econometric approach which sees economic growth as an open ended process. The major conclusion of the fourth chapter (third study) is lack of strong evidence of evolution (intra-industry selection) to foster productivity growth and re-allocation (structural change). Thus, the three studies not only shed light on the inter-relationships between access to bank loans, income distribution and productivity growth through a deep analysis of the concepts, theories and their usefulness, but also empirically investigate the nature of their causal relationships and estimate their effects. These two aspects will contribute to the growing literature on ACE.
Access to Credit and the Impact of Credit constraints on Agricultural Productivity in Ethiopia: Evidence from Selected Zones of Rural Amhara
(Addis Ababa University, 2015-02) Dessie, Tilahun; Admassie, Assefa( PhD)
The economy of Ethiopia is characterized by its reliance on subsistence agriculture and the existence of underdeveloped financial institutions, especially in rural areas. In the literature, the role of credit as an instrument to boost productivity and welfare has long been justified. The main goal of this paper is to show the agricultural credit access landscape and investigate the impact of credit constraints on agricultural productivity in Ethiopia by using a household survey data from rural Amhara collected in 2013. After adjustments throughout the data cleaning process, the study relied on a survey of 1082 households which are found with valid information for all the variables considered in study. The study revealed that 66.17 percent of households are credit constrained which shows how the rural credit market landscape in Ethiopia is highly imperfect. By using an endogenous switching regression model, the study tried to show the effect of demographic and other socioeconomic variables on credit constraint status of households and simultaneously the impact of credit constraints on agricultural productivity. Finally, the paper uncovered the existence of a huge productivity loss due to various types of credit constraints. The cumulative impact is estimated to be 17.94 percent, i.e. an additional per hectare income of 1410.17 Ethiopian birr productivity gain if all types of credit constraints happen to be eliminated. This calls for a well-coordinated policy intervention compatible with the dynamics of rural institutions and other location bottlenecks.
Access to Finance and Firm Growth: The Case of Ethiopian SMEs
(A.A.U, 2023-12-04) Asamnew Techan; Dr. Befikadu Degefe
This study conducts an empirical investigation of the effects of access to finance on the growth of Ethiopian SMEs. In order to achieve this, the study made use of an enterprise-level data set from the World Bank’s Enterprise Surveys. The study specifically uses the World Bank Enterprise Surveys two year panel data set for Ethiopia (i.e. for the year 2011 and 2015). The dataset consists of 1,486 Ethiopian firms of which the largest share (907) is micro and small firms. The study used descriptive and econometric analysis to process the data, obtain the relevant estimation results and fully discuss the purposes under the study. Both subjective and objective measures of access to finance were used for the sake of robustness. The subjective measure of access to finance is obtained from the ranking of access to finance as no obstacle or severe obstacle to business operations. The objective measure of access to finance measures whether firms are credit constrained or not. The study found that firm growth is significantly constrained by access to finance. Firm age is also found to have a negative relationship with firm growth while innovative firms have a better chance of growth than noon-innovative firms. Firm’s access to finance is strongly determined by factors such as firm age, firm size, collateral, firm’s innovative practices, and firm’s export orientation. However, whether these factors constrain access to finance depends on firm size.
Accesses in Determining Foreign Direct Investment: Panel Data Analysis of Sub-Saharan Africa Countries
(A.A.U, 2012-06) Getachew, Melese; Fantu, Guta (Dr)
More recently, due to the globalization process and the increasing roles of Multinational Corporation in economic development, many empirical literatures have been tryi ng to take into account the effects of not only the classical factors: but also the various institutional issues which affect considerably the For flow in the host countries. So, the objective of this paper is to explore the major accesses to FDl flow to the Sub Saharan Africa countries by focu sing on main institutional factors, and other conventional variables in For flow to the region. For this purpose, we employed two panel model techniques: the fixed effect and dynamic panel model (the system GMM estimator of Arellano and Bover (1995) and Blundell and Bond (1998)) by utili zing the data of 32 SSA countries covering the period 1994-20 I O. Our findings reveal that among the in stitutional quality variables ( regulatory quality), past level of inward FDI, market size, openness, natural resource availability, financial development if supported by regulatory quality are found to be important derivers of FDI flow to the region. Conversely measures in control of corrupt ion, the existing rule of law, macroeconomic condition (i.e. inflation and exchange rate) and infrastructural situation are found to be insignificant for the region's FDI flow. To increase For flow to the region policy makers (economic administers) of the region need to strive to improve and amend their policy regarding their institutions: rule of law, the way to control corruption, develop infrastructures, improve macroeconomic condition and should diversify and develop their economies.
Achieving the Millennium Development Goals in Ethiopia: Some Problems
(A.A.U, 2000-06) Mengistu Hailu, Kassahun; Mulat, Teshome (Professor )
In this paper evaluation of achievement of MOGs has been undertaken. Based on this, LOCs are out of truck in achieving most of the MOGs though; some uneven achievements were recorded in these countries. The proportion of people living below poverty line was declined from 40.4 and 45.5 percent of the 1990 average to 36.1 and 38.7 percent in 2006 in LOCs and in Ethiopia respectively. Net primary education was increased from 72 to 78 Percent in LOCs (average) and from 22 to 67.8 percent in Ethiopia during the same period respectively. Similarl y, the ratio of girls to boys in primary and secondary education was increased from 0.76 in 1990 to 0.89 in 2006 in LOCs (average); while it was increased from 0.68 to 0.81 in Ethiopia during this period. In reducing under- five mortality rate and infant mortality rate (mortality rate of children of below one year old), while in LOCs under- five and infant mortality rates were reduced from 180 and 113 per 1000 live birth of the 1990 average to 142 and 90 in 2006 respectively; in Ethiopia under-five and infant mortality rates were reduced from 204 and122 of the 1990 figure to 123 and 80 in 2006 respectively. Regarding maternal mortality rates, it was red uced from 890 and 850 in 2000 to 870 and 720 in 2006 in LOCs (average) and in Ethiopia respectively. In reversing the spread of HIV/AOIS and incidence of malari a, HIV prevalence rate was reduced from 2.29 and 2. 7, percent to 1.7 and 2.1 , percent in LOCs average and in Eth iopia respectively. Moreover, Ethiopia was also successful in reversing the incidence of malaria. In insuring environmental sustainability goal (MOG goal 7), as opposed to what is expected, destruction of area covered by forest increased in LOCs in general and in Ethiopia in particular though, with regard to expansion of pure water and sanitation service, LOCs managed to increase the proportion of population with access to safe water and sanitation from 51 percent and 21 percent in 2000 to 59 percent and 38 percent in 2004 respectively; while Ethiopia failed in achieving both targets. Regarding developing global partnership for development (MOG goal 8) LOCs in general and Ethiopia in particular received $126,894 million (10.67 percent of commitment) and $9,639 million (10.02 percent of the commitment) from OAC member countries respectively. Hence, if th e current achievement continues in the remaining years, LOCs co uld achieve only the targets of: reversing the spread of HIV/AOIS; halving the proportion of people with out access to safe drinking water and basic sanitation. On the other hand, Ethiopia could only achieve only targets of reducing infant mortality rate; reversing the spread of HIV and incidence of malaria.
Adoption of Climate Smart Agricultural Practices in Raya Kobo Woreda
(A.A.U, 2020-10) Iyasu, Hailu; Assefa, Admassie (PhD)
This thesis takes an integrative approach how variation decision predicts adoption via technology attributes and behavioral features, and synthesize with other socioeconomic variables to investigate how these factors influence the uptake of CSA practices. The study applies both Partial Least Squares Structural Equation Model (PLS-SEM) for prediction as well as the Multinomial Logit model to determine adoption decisions. Except observed trialability constructs the bootstrapped measurement model results shows a significant relation with their latent variables, as well as, the inner structural model technological attribute was highly explained negatively by technological complexity (-40.5%), intention by 39% by personal attitude. CSA adoption was highly and directly by usefulness, technological attribute, cost, and intention respectively by 35.4%, -26.5%, -22.7%, and 22.4%, supporting for specified hypothesis. Moreover, technology attributes and behavioral latent constructs were also simulated in the MNL model along with socioeconomic factors. Results show that education, large land size, access to CSA information, extension, and credit services, inconsistent rainfall, and occurrence of pests and diseases increase the likelihood of adopting one or more CSA practices. While, livestock unit, non-farm income activities, and high temperature reduce the probability of adaptation decisions. These results imply that efforts to promote the widespread adoption of CSAPs by farmers in the study area should focus on enhancing farmers' educational level, create awareness regarding CSAPs, addressing liquidity constraints and deliver extension services. The adoption of CSAPs can also further be enhanced by raising farmers' awareness, and skill and knowledge to ease technological attributes, and change their perceptions and attitudes towards sustainable farming practices
Agricultural Productivity, Industrialization and Structural Transformation in the Ethiopian Economy: Evidence from Rural Households
(Addis Ababa University, 2015-06) Simesh, Getaendale; Tuffa, Adane (PhD)
This study tries to investigate the effect of agricultural productivity on the industrial sector and further its effect on the structural transformation of the Ethiopian economy. Inspired by the works of Matsuyama (1992) on agricultural productivity and industrialization we tried to see effect of agricultural productivity from a microeconomic perspective. Using a panel data from Ethiopian rural households which is conducted from 15 rural villages in four rounds with a time span of 15years (i.e. 1994, 1999, 2004 and 2009) we tried to link the agricultural sector with the industrial sector. Taking labor participation on farm activities and the consumption share of manufactured products as dependent variables we develop two independent models considering agricultural productivity as a major explanatory variable. A Housman test is conducted in order to select the appropriate effect (i.e. Random and Fixed models) for the panel model and further tests are also conducted to check validity of the model. An almost ideal demand system is also employed in order to see the consumer’s elasticity of demand towards manufacturing products. From the results it was found that development of the agricultural sector is found to be insignificant in making progress for the industrial sector. Furthermore, its role for the realization of a structural transformation of the economy is found to be unfortunate.
Aid, Pro-poor Spending and Welfare in Ethiopia
(A.A.U, 2005-07) Lemma, Meheret; Woldehanna, Tassaw (Dr)
The objective of the paper is to test the hypothesis that aid through funding pro-poor public expenditures can improve welfare in Ethiopian. An index of pro-poor expenditures has been constructed to analyze this transmission mechanism. In order to obtain a coefficient on aid variable that includes its indirect effect through public expenditure allocation a regressor is constructed. The estimation is conducted based on the annual data between 1965/66 and 2001/02 using the johanson maximum likelihood Procedure. The empirical analysis supports the hypothesis regarding aid effectiveness on poverty through funding pro-poor expenditures. On the other hand the result shows though domestic revenue significantly contributes in financing pro-poor public expenditure, non aid financed pro-poor public spending is rather found to be inefficient in improving welfare. The result further reveals the impact of growth on welfare is insignificant implicating that growth by its own accord is not enough in Ethiopia
Analyses of Affordability and Determinants of Willingness to Pay for Improved Water Service in Urban Areas, Strategy for Cost Recovery. (A Case Study of Nazareth Town, Ethiopia)
(Addis Ababa University, 2002-07) Bayrou, Alebel; Alemu, Tekie (PhD)
The provision of improved water supply service both in urban and rural areas of the country is essential. Millions of people are facing problems of obtaining adequate potable water supply. When we see the coverage of improved water supply in both urban and rural areas of the country it is very low, though it is relatively better in urban areas. This shows much is remaining to attain full coverage for the people of Ethiopia. Parallel to increasing the coverage we need to consider the proper use of the resources and sustainability of the service The policy for increasing the coverage as well as the proper use and sustainability of the service requires implementation of a cost recovery system, which can be either full or partial cost recovery. In order to implement cost recovery system we need to examine the affordability and willingness to pay of the beneficiaries. Therefore, the objective of this paper is to examine the determinants of the willingness to pay of water consumers and to find out whether it is possible to introduce full cost recovery program to provide improved water supply in urban areas of the country. We used a contingent valuation method to examine the determinants of willingness to pay. The value elicitation method used in our study is bidding game. The total number of households surveyed is 307, and an in-person interview was used to administer the survey. Unlike most studies, we used a censored LAD estimation for the empirical analyses, which does not need the normality and homoskedacity assumption of the distribution of the error term. We also used the probit model to see the effect of the explanatory variables on the choice of the household to the improved water service. The CLAD estimation result showed gender, income, monthly expenditure for water consumption, quality and time taken to fetch water from existing source significantly affects the respondent’s willingness to pay. While the probit estimate result showed that wealth, income, education level, source the household is being used, quality and time taken to fetch water from the existing source affect the choice of the respondents to the improved water service. The descriptive analyses result revealed that the mean WTP for improved water service is higher than the existing tariff. And the affordability analyses result also indicated that consumers are able to pay if they are provided the improved water service at a price equal to the average incremental cost of providing the improved water supply service
An Analysis of African Regional Trade Integratlon Using A Gravity Approach: The Case of Common Market for Eastern and Southern Africa (COMESA)
(A.A.U, 2009-06) Hailu, Belete; Estiphanos, Girma (Dr.)
Although Regional integration in Africa has a long history which dates back to the and of 19th century, it has failed to achieve its objectives, Several studies have pointed out different factors which contribute for its poor performance. These factors include loss of revenue due to trade liberalization non-complementarily of tradable goods, poor private sector participation, overlapping of memberships and so on. his study assessed and analyzed the problems and determinants Africa regional trade integration in general and COMESA in particular. however, it gives a due attention to determine the impact of trade openness ( trade liberalization) and overlapping of memberships on top of other determinants ( GDP, precipitate GDp, common boundaries, common language of member countries, distance between member countries etc.) on COMESA total trade flow using gravity model approach. The study comes up with the finding that trade openness (trade liberalization) within COMESA member countries boosts the intra-trade flow of the region. in contrast to this, overlapping of membership results in decline for the intra- trade flow of COMESA. Thus, the study recommends that COMESA member countries should liberalize their trade ,diversify the tradable commodities ,increase private sector participations and they should not to be a member of more than one regional group.
Analysis of Agricultural Policy and its Effectiveness in Economic Growth: An Empirical Investigation in the Ethiopian Case
(A.A.U, 2007-03) Kaleab, Tsegaye; Singh, Shail (Dr)
This study has tried to identify the sources and determinants of agricultural product at aggregate level. Agricultural product is examined as a result of labor, land, change in policy environment and weather condition (rainfall). The common finding in the agricultural policy analysis is that agricultural policies fail to achieve their main objectives of farm income support efficiently at national and regional level. The sect oral analysis of the study shows that agriculture had a highest fluctuation throughout the sample period in comparison to other sectors. Nevertheless the production (yield) of major crops has been grown and government attention in terms allocating government expenditure on agriculture has been also increased in recent government than the p revious. The time series result of the study shows that labor and land in the short run as well as in the long run are found to affect agricultural product positively and statistically significant. In the short run government expenditure also affects the sector significantly and positively. The contribution of growth of agriculture to national well-being, on the other hand, is found to be less than that of the non-agricultural sector in the long run. The statistical analysis also shows that the agricultural sector which still provides the livelihood for most of the population made increasing growth rate but with a declining contribution to the overall economic growth as compare to other sector. Rapid population growth and low productivity of land and labor are the main challenges which need great policy attention to improve the work ethic as well as technological expansion to transform and play the sector's significant role on the overall economic growth.
The Analysis of Behavior of Private Investment in Response to Fiscal Policy Changes in Sub - saharan Africa.
(A.A.U, 2007-08) Debele, Fikru; Panda, C. (Dr)
Despite the belief that fiscal policy can influence both economic growth and private investment. , attempts like the stmctural Adjustment Program and Poverty Reduction Strategic Papers have not yet brought those much promising results in Sub- Saharan Africa. if so, can policy makers help enhance the performance of private investment in the region through fiscal policy changes? In an attempt to answer this question, annual panel data for the period 1986- 2003 for twenty three countries in the region was utilized. The data set depicted the persistence of heterogeneity among the countries. The fixed effects model was applied based on the specification tests. The regression output indicated that private investment is positively responsive to previous period fiscal policy measures, per capita GDP and its growth rate. However, current period fiscal policy measures, domestic credit to the private sector, real exchange rate, inflation, and the size of government control in the exchange rate market appeared insignificant in affecting private investment in the region. debt servicing significantly and negatively discouraged private investment, while debt stock was not found doing so. The conclusion is that previous period policy measures are more influential in promoting private investment in sub-Saharan Africa. A high debt servicing reduces resource availability for domestic investment immediately than huge external debt stock, whose repayment may be cancelled, at least based on conditions, as observed in HIPes case.
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.
Analysis of Budget Deficit and its Structural Determinants in Ethiopia
(A.A.U, 1996-06) Tsegaye, Deressu; Mulat, Teshome(Dr.)
Immediately following the declaration of socialism in the country in 1975, both government revenue and expenditure increased substantially . Nevertheless, the growth of government expenditure was not matched by growth of revenue hence persistent and large budget deficits became the feature of Ethiopian economy. In the face of 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 the ceilings imposed on Government borrowing from domestic sources . This study examined whether the structural factors hypothesised by Morrison (1982) are responsible f or the growing budget deficit. The estimated regression results show that in the long run government budget deficits is likely to increase the higher is the degree of government involvement in the economy, the less exercise control over expenditure, the higher is revenue instability and the lower is growth in government revenue. However, the hypothesis that budget deficit decreases as economy grows is not supported . In the short run it is only growth in government revenue that is found to explain the deficits. Al though the recent policy of the Transitional Government of Ethiopia planned to decrease the budget deficits, this Objective was not attained due to the reduction in tax rates. Moreover, the introduction of the regional administration led to the duplication of government bureaucracy thereby pushing up the expenditure level.
Analysis of Causality and Export-Led Growth Hypothesis (ELGH) in Ethiopia
(A.A.U, 2005-07) Adem, Mohammed; Yoseph, Getachew ( Ato)
It is generally believed that for a developing country export performance plays a pivotal role in providing the much-needed impetus for economic growth. Export-led growth has been put forward as the efficient alternative to inward- orientation strategies of development. This is because it is believed to lead to higher total-factor-productivity growth and encourage foreign direct investment. In spite of the presence of numerous studies on the relationship between exports and economic growth, empirical investigations to-date have produced mixed or contradictory results; while most cross-section studies have found a positive association between export and growth, a considerable number of time series methodologies found mixed results, either supporting or rejecting the export-led growth hypothesis. This paper examines the Export-led growth hypothesis (ELGH) for Ethiopia for the period 1960-2004. It builds up on Feder's (1983) model to investigate empirically the relationship between exports and economic (GDP) growth using recent data from the National Bank of Ethiopia. The study finds that the ELGH is valid in this particular case but, only in the long run. Although the results of the study suggest that exports have a positive effect on the overall rate of economic growth and could be considered an "engine of growth" as the ELGH advocates, their impact was not, however, statistically supported in the short-run. , Moreover, causality was found running from GDP to Export confirming uni-directional causality.
An Analysis of Demand for Beef with a Focus on Quality and Safety in Addis Ababa City, Ethiopia
(A.A.U, 2007-09) Amare, Samuel; A.Jabbar, Mohammad (Dr)
Conjoint analysis was applied to assess the part worth of beef quality and safety attributes using a cross sectional data from a stratified sample of 300 household s in Add is Ababa city collected in Jun e 2007. The software used for estimation is SPSS 15. Results show that fat content, fretless, neatness of meat shop and personnel, abattoir stamp and price are significant quality and safety attributes that consumers use in their beef purchase decisions. Interactive variables like family size, religion, age, schooling, stay in Addis Ababa and marital status are also found to significantly influence quality and safety perceptions. on the other hand some variables such as sex of meal planners are found 10 have insignificant role in quality and safety perception. T he result further indicate s that income has a great role in influencing people perception regarding safety and quality of beef. The result of the stud y could be used for designing safety and quality standard for local wet market. Key words: Beef demand, Quality and safety attribute s, conjoint analysis, Addis Ababa
Analysis of Determinants of Adoption and Use Intensity of Organic Fertilizer in Ejere District, West Shoa, Oromia, Ethiopia
(A.A.U, 2020-10) Milkessa, Dejene Robi; Atnafu, Gebremeskel (PhD)
The main objective of this study is to investigate the determinants of Adoption and use intensity of Organic Fertilizer in Ejere District, West Shoa, Oromia, Ethiopia. Primary cross-sectional data was collected from systematically selected 53 adopters and 151 non- adopters of organic fertilizer. The study employed probit model and the analysis was made using Cragg’s double hurdle. The empirical Results revealed that age of household negatively influenced decision to adopt organic fertilizer while livestock numbers, extension contacts, access to information media, membership to farmer based organizations, farm experience and farm income positively influenced the decision to adopt organic fertilizer. However, the study found out that gender, household head education, and distance to near market have statistically insignificant impact on adoption of organic fertilizer. In addition, this study found that being single, divorced or widowed significantly decreases the adoption of organic fertilizer while getting married has opposite impact. What’s more, farm size and membership to farmer groups influenced intensity of adoption positively while farm income and application frequency influenced use intensity of organic fertilizer negatively. This study also has an important policy implication. The findings of this study imply that appropriate and adequate extension services have to be provided in line with current agricultural development policies of the country. The government body of the district should encourage entrepreneurs to invest in organic fertilizer processing plants. The government should assign skilled and disciplined agricultural extension workers and must closely follow the performance the assigned extension workers to ensure that the farmers get the expected services. The policy makers should target at enabling farmers to have access to information media such as radio, and encouraging farmers’ group formation and membership to such organizations. Improving farmer access to credit facilities needs to be enhanced. The national government along with local government should investment on the educational sector, expanding of infrastructural facilities, creating market activities, and building institutions. The government should encourage farmers to rear animals under intensive livestock management systems that support more livestock units per unit of land for provision of manure. This study would like to invite researchers to conduct more investigation on farmers’ perception towards organic fertilizer and income and welfare impact of using organic fertilizer in the study area.

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