Development Economics

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    Analysis of Vulnerability to Food Insecurity in Rural Households’ of Ethiopia
    (Addis Ababa University, 2022-06) Tsige Zeray; Sisay Debebe (PhD)
    This study examines Analysis of vulnerability to food insecurity in rural households of Ethiopia, using a sample data of 3115 rural households from the Ethiopian socio economic Survey (ESS). Calorie method was employed to determine food insecurity and vulnerability. In addition to descriptive statistics, GLS and the Logit models was used to analyze the data. The Results indicates that, Majority of the households were found to be food insecure, which is 62.95% were found to be food insecure (1961 out of 3115) whereas the rest 37.05% of the households were found to be food secure. Furthermore, the estimated logit model result revealed that Rainfall shock, Death of livestock were positively and significant influence current food insecurity status of household, on the other hand, age of household head, Education level of the household head, annual household farm income, participation in off farm activity, access to credit and remittance were negatively affected the extent of households’ food insecurity. General Least Squares regression results indicate that Total land holding in ha of household head has a significantly positive correlation with calorie intake and Households access to credit significantly increase expectation of food consumption. Empirical finding also shows that rain fall shocks (environmental shocks) have larger impact on vulnerability to food insecurity. Based on the intensity of their vulnerability, households were grouped highly vulnerable-food secure (18.4 percent), and low vulnerable-food secure (45.84 percent).Overall, about 54.4 percent of households were categorized as vulnerable to food insecurity. Key words: Vulnerability as expected poverty, Vulnerability to food insecurity, Food insecurity, Ethiopia
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    The Impact of External Debt on Foreign Direct Investment- Growth Nexus: The Case of Sub Saharan Africa
    (Addis Ababa University, 2022-06) Dessalegn Tsega; Sissay Debebe (PhD)
    Many developing countries now in the world gain an advantage and has been benefited from the world FDI so as to promote their economic growth. While, other developing countries like Sub Sahara African countries are set to be struggled with external debt crisis still now. Empirical studies on external debt and FDI has been done so far. However, the issue is still controversial and inconclusive, studied only at country as well as sub region level and previous studies did not take in to account that, which (debt or FDI) greatly affected economic growth in the region and also differ in the methodology they applied. Therefore, this study examines the impact of external debt on the inflow of foreign direct investment to SSA region and to identify the more impactful variable (external debt and FDI) on economic growth nexus using annual secondary panel data approach extracted from the WDI database from 2001-2020. The data were analyzed using descriptive statistics, as well as dynamic panel models of one step system-GMM approach. The validity of results was confirmed by the Arellano-Bond test for autocorrelation in the disturbance term and the Hansen and Sargan tests for the validity of instrumental variables. The results of the one step system GMM suggest that external debt exerts a negative impact on both FDI inflow and economic growth of SSA countries. The lagged FDI, external debt, trade openness, gross fixed capital formation, and exchange rate are factors significantly affecting the inflow of FDI. Economic growth in the region also significantly influenced by; previous year growth, external debt, infrastructure, and population growth. The study concludes and recommends that SSA countries should reduce their external borrowing utmost not beyond their maximum threshold level and thus should adopt and implement policies that favors in improving trade openness, rising domestic saving, attracting FDI inflow in order to finance their capital budget deficit and focusing on expanding infrastructure that will enhance productivity so as to improve economic growth. Keywords: FDI, External Debt, Economic Growth, System-GMM, Sub Saharan Africa.
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    Determinants of Foreign Direct Investment Inflow to Ethiopia: A Time Series Analysis
    (Addis Ababa University, 2022-01) Yalew Mengistie; Mulugeta G/Mariam (PhD)
    The main aim of this paper is to identify the key determinant factors of FDI inflows to Ethiopia for the period 1991 to 2020 using autoregressive distributed lag model (ARDLM) with Error Correlation Methods. The empirical results reveal that trade openness, domestic market size, inflation rate, and political stability and absence of violence are the key determinant factors of FDI inflows to Ethiopia. Moreover, human capital and government effectiveness are also important determinant factors of FDI inflow in the short run, while infrastructure facility is a fundamental determinant factor in the long run. Among these factors, at 5% level of statistical significance, trade openness, and domestic market size affect FDI inflow positively both in the short run and long run, whereas inflation rate, and political stability and absence of violence have negative and statistically significant effect in both cases. On the other hand, government effectiveness and human capital associated with FDI inflow to Ethiopia positively in the short run. Besides, infrastructure facility development has statistically significant effect on FDI inflow in the long run. Hence, these findings implies that minimizing barriers to trade, improving domestic market size and infrastructure facilities, creating more stable macroeconomic and political environment, giving due attention to well-organized system of education, and having effective governance system are also crucial to attract more FDI to Ethiopia. Keywords: FDI, Ethiopia, Determinant, ARDL Model, Bound Test, ECM
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    The Effect of Credit Constraints on Agricultural Input Technology Adoption of Farmers.
    (Addis Ababa University, 2023-06) Hikma Sultan; Sisay Debebe (PhD)
    Agricultural credit constraints hinder the adoption of modern input technologies and contribute to low agricultural productivity in developing nations, including Ethiopia. This study investigates the nature of credit constraints among smallholder farmers, factors influencing these constraints, and their impact on the adoption of Chemical fertilizer and agrochemicals. Using nationally representative LSMS-ISA data from 2200 smallholders, two econometric models (MNP and SUR) are employed to estimate credit constraint status and analyze input technology adoption. The findings reveal a significant experience of credit constraints, influenced by both supply-side and demand-side factors. Collateral ownership-related factors (e.g., livestock ownership, land use certificates) influence supply-side credit constraints, while literacy, remittance access, and agricultural extension services affect demand-side credit constraints. Moreover, credit constraints negatively affect the adoption of agrochemical input technology. Addressing credit constraints requires mitigating both supply-side and demand-side factors. Strengthening smallholders' capacity for bankable collateral ownership and providing information literacy, education, and agricultural extension services can alleviate these constraints. Resolving both demand-side and supply-side constraints can enhance credit access, increase the adoption of modern input technologies, and ultimately improve agricultural productivity. Policymakers should focus on targeted measures to enhance credit availability and access, thereby promoting sustainable agricultural development in Ethiopia. Keywords: Rural credit constraints, Agricultural input, adoption, Supply-side and demand-side, Ethiopia
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    The Impact of Fiscal Decentralization on Economic Growth in Ethiopia
    (Addis Ababa University, 2022-06) Abdurahman Hassen; Sisay Debebe (PhD)
    Ethiopia embarked its journey of fiscal decentralization during the period of the Transitional Government of Ethiopia (TGE) and later, with the adoption of the 1995 Constitution of the Federal Democratic Republic of Ethiopia, fiscal decentralization was formalized. Two and a half decades after the 1995 Constitution, which set the path for fiscal decentralization in Ethiopia, no empirical evidence exists to prove whether fiscal decentralization has boosted economic growth or not. Thus, the main objective of this study is to investigate the impact of fiscal decentralization on economic growth in the Ethiopian context. The study used the Auto Regressive Distributed Lagged (ARDL) model to identify short and long run relationships between economic growth, fiscal decentralization, and chosen macroeconomic variables. The model was estimated using annual data of 25 years for the period ranging between 1996/97 to 2020/21. The model exhibits all of the characteristics of a good regression model. The model passed all serial correlation, normality, Heterosedasticity, and Ramsey RESET tests. The Long-run estimation of the econometric analysis shows statistically significant and positive relationship between GDP per capita and fiscal decentralization in Ethiopian case. Similarly, the short-run ARDL estimate indicates that fiscal decentralization is positively related with GDP per capita and it is statistically significant. The study suggests that government can use fiscal decentralization as one tool to increase economic growth by devolving fiscal responsibilities to lower levels of government, strengthening local level institutions and enhancing competency of lower level officials. Keywords: Fiscal Decentralization, Economic Growth, ARDL Model, Fiscal Imbalance, Ethiopia
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    The Impact of Exchange Rate Fluctuation on International Trade: In Ethiopia
    (Addis Ababa University, 2022-06) Abraham Siltan; Berhanu Denu (PhD)
    This study investigates the impact of exchange rate fluctuation on international trade in Ethiopia. The research is carried out under the assumption that exchange rate fluctuations are deemed to impact the volume of export and import trading activities. The study made use of secondary data from 1980 to 2021; on the following variables real effective exchange rate (REER), exports (Exp), imports (Imp), real Gross Domestic Product (RGDP), and inflation rate. The data were analyzed using descriptive and econometric methods in this study. Descriptive statistical methods such as mean, standard deviation, and graphical comparisons were used for measuring trends of the real effective exchange rate to compare with export and import sectors. Econometric methods in line with the theoretical and Empirical framework discussed in the literature review section, the following technique are applied, Johansen co-integration technique, vector error correction model (VECM), Granger causality, and variance decomposition to capture both short-run and long-run impact of the exchange rate. The VECM was used to capture both short- and long-run interactions. The results revealed a significant and positive association between the real effective exchange rate, real gross domestic product, and export, but have a negative relationship between inflation and export. At the same time, there is a significant and positive relationship between inflation, real GDP, and imports. However, the real effective exchange rate and imports have a negative relationship. This paper finds evidence that exchange rate fluctuation is the main factor that affects the level of international trade as measured by export and import flows in Ethiopia. It appears that if policymakers wish to promote export and decrease imports to improve the balance of trade in Ethiopia, they have to keep an open eye on steady appreciation of the exchange rate and reduce volatility. Key words: Exchange Rate Volatility, International Trade, Export, and Import
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    Effects of Demonitizetion Instrumentson the Performance of Micro, Small and Medium Scale Enterprises in Ethiopia: The Case of Arada Subcity in Addis Ababa
    (Addis Ababa University, 2022-06) Adugna Alemayehu; Berhanu Denu (PHD)
    People are busy and talking about Demonetization and its effects on the profitability of MSMEs since there is a limitation on cash based economy which is replaced with a new advanced technology and then the study was intended to investigate the effects of demonetization instruments on performance of micro, small, and medium scale enterprises in Addis Ababa Arada sub-city. The study examines the recent trends of the effects of currency demonetization on the profitability of MSMEs. Taking a descriptive and explanatory research design, the study accomplishes the objectives by focusing on the owners of the MSMEs. The target population comprised of 619 MSMEs sectors which are legally registered in Arada sub-city. Stratified sampling method was used to calculate a sample size of 186 respondents because, it allows evaluating data from different subgroups or strata to obtain sample representing entire population and administered questionnaire. The descriptive data wereanalysed using frequency table and percentage, while linear regression analysis was used to test the relationship between the independent and the dependent variables or formulated hypothesis using SPSS V.26. From the findings, the study concluded that, POS, ATM, Internet Banking, Mobile Banking, and Tele birr has a positive effect and significantly influence the performance (profit) of MSMEs. Based on the findings, some recommendations among others made are; policy makers should strengthen the government policies and regulatory framework to create conducive climate during the process of demonetization. Creating awareness concerning the currency demonetization and encouraging and increasing usage of demonetization instruments, then the simple way that the society is going to the digitalization or cash less economy were created. Keywords; Demonetization, MSMEs, Mobile banking, Internet banking, Tele birr, POS, Performance of MSMEs
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    The Impact of Population Growth on Ethiopian Economic Growth
    (Addis Ababa University, 2022-07) Asamerew Dejenie; Berhanu Denu (PhD)
    This study empirically investigates the impact of population growth on the economic performance of Ethiopia for the period 1991-2021. Demographic transition enables in creating policy environment that considers maximum advantage of the nation’s demographic potential. VECM model was used to investigate the relationship between the population growth and economic performance of the country. The result of the model shows that the impact of population is negative and significant and the problem associated with huge population growth is the flood of the newly workforce, its management and providing different facilities even basic needs become a challenge for the government and policy makers. To tackle this issue, this study incorporated unemployment rate and agricultural growth rate to the model so as to investigate the impact of population growth directly and indirectly on economic growth in Ethiopia. The result of the study shows that population growth has negatively and significantly contributed to economic development contrary to agriculture. Saving rate, trade openness and human capital are also positive and significant factors to economic growth in Ethiopia. Hence, the government is advised to effectively and efficiently utilize the abundant labor force and work hard to eradicate the prevailing high level of unemployment. Key words: Population growth, unemployment, economic growth, VECM, Ethiopia
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    Monetary Policy Transnission Mechanism in Ethiopia: Structural Var Analysis
    (Addis Ababa University, 2022-07) Berhanu Berihun; Berhanu Denu (PhD)
    Monetary Policy is increasingly important to maintain price and exchange rate stability and support sustainable economic growth. The main objective of this paper was to study and identify the main transmission mechanism of monetary policy in Ethiopia. To achieve the objective, secondary source of data was collected using quarterly time series data from 2000/01Q1 to 2020/21Q4. Small open economy structural Vector Auto Regression (SVAR) model with two vectors of variables. All the variables are tested for unit roots using Augmented Dickey Fuller and the Phillips–Perron test and model stability and other necessary tests was conducted. The results of Structural impulse response and structural variance decompositions derived from Structural VAR show that direct monetary transmission which is the Reserve Money in case of output and reserve money, domestic credit and nominal effective exchange rate have significant impacts on price level in short term. The monetary aggregate (M2), the average lending rate, the reserve requirement and nominal effective exchange rate have significant impacts on output and price level in medium term in Ethiopia indicating that monetary policy transmission channel is effective in influencing macroeconomic variables in the Ethiopian economy. However, the results of interest rate channel-which is represented by the average lending rate in affecting output and price is not effective in short run relative to other channels. while the study also illustrates that the monetary aggregate contains important additional information in the transmission process of monetary policy shocks in Ethiopia. Key Words: Impulse, Monetary, Policy, Response, Decompositions, Ethiopia
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    The Impact of External Debt on Foreign Direct Investment- Growth Nexus: The Case of Sub Saharan Africa
    (Addis Ababa University, 2022-07) Dessalegn Tsega; Sissay Debebe (PhD)
    Many developing countries now in the world gain an advantage and has been benefited from the world FDI so as to promote their economic growth. While, other developing countries like Sub Sahara African countries are set to be struggled with external debt crisis still now. Empirical studies on external debt and FDI has been done so far. However, the issue is still controversial and inconclusive, studied only at country as well as sub region level and previous studies did not take in to account that, which (debt or FDI) greatly affected economic growth in the region and also differ in the methodology they applied. Therefore, this study examines the impact of external debt on the inflow of foreign direct investment to SSA region and to identify the more impactful variable (external debt and FDI) on economic growth nexus using annual secondary panel data approach extracted from the WDI database from 2001-2020. The data were analyzed using descriptive statistics, as well as dynamic panel models of one step system-GMM approach. The validity of results was confirmed by the Arellano-Bond test for autocorrelation in the disturbance term and the Hansen and Sargan tests for the validity of instrumental variables. The results of the one step system GMM suggest that external debt exerts a negative impact on both FDI inflow and economic growth of SSA countries. The lagged FDI, external debt, trade openness, gross fixed capital formation, and exchange rate are factors significantly affecting the inflow of FDI. Economic growth in the region also significantly influenced by; previous year growth, external debt, infrastructure, and population growth. The study concludes and recommends that SSA countries should reduce their external borrowing utmost not beyond their maximum threshold level and thus should adopt and implement policies that favors in improving trade openness, rising domestic saving, attracting FDI inflow in order to finance their capital budget deficit and focusing on expanding infrastructure that will enhance productivity so as to improve economic growth. Keywords: FDI, External Debt, Economic Growth, System-GMM, Sub Saharan Africa.
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    The Causes of Rural-Urban Migration in Addis Ababa: Thecase of Kolfe Kerianiyo Sub-City, Ethiopia
    (Addis Ababa University, 2022-06) Gidamu Hundecha; Berhanu Denu (PhD)
    Ethiopia is a developing country with a relatively fast-growing population and emerging economy, and the second most populated country in Africa. The main objective of this study is to analyze the causes of rural-urban migration in Addis Ababa; the case of Kolfe Keraniyo sub-city; the study also assesses the socio-demographic and economic characteristics of immigrants and examines the problem of lack of land ownership as a contributing factor for rural to urban migration. Multi-stage cluster sampling procedures used and migrants were purposively selected to cover a total of 217 migrants in the study area.. Data were analyzed using both descriptive and inferential statistical analysis models. The majority of migrants are male in which comprise 60.8% compared to total migrants. Similarly, the highest percentages (89.4%) of migrants are concentrated among youths and reproductive age groups. The greater number of migrants (about 89.8%) are single (unmarried). On the other hand, about 72.8% of migrants are originally from rural areas. Most of migrants (about 83.9%) attained formal education. The decision to migration (about 51.3%) was made by the migrants themselves. Economic reasons such as job seeking covers 38.2%, job transfer (10.1%) and migration for the purpose of advancements of education comprise 21.2%. The econometrics analysis of probit regression model shows, among variables, gender; age of migrants; educational status and job waiting are statistically significant to affect rural-urban migration in the study areas. Subsequently, the study proposes governments should focus on; job creation, provision of various social services, and formulate strong chain between rural cooperatives and organization and urban market systems. Key Words: Rural-urban migration, Kolfe Keraniyo sub-city, immigrants, probit regression model
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    The Effect of External Finance on Economic Growth in Ethiopia: An Autoregressive Distributed Lag Modelling Approach
    (Addis Ababa University, 2022-06) Hailemichael Kebede; Sisay Debebe (PhD)
    External financial sources are considered as one of the very important accelerators of economic growth. Development requires economic growth to alleviate poverty, and external financial sources are perceived as a necessary condition for more rapid growth. A descriptive and quantitative research approaches were conducted with the aim to examine the overall effects of external sources of finance on economic growth of Ethiopia. An Autoregressive Distributed Lag (ARDL) model was used to estimate the short and long run relationship of variables using time series data sets from 1990-2021 G.C. The results shown that external debt and grant have a positive and statistically significant while remittance and foreign direct investment have a positive but not statistically significant effect on real gross domestic product in the long-run. In the short-run, remittance and grant have positive but statistically not significant effect on rGDP at their current values. External debt has a negative and statistically not significant effect on rGDP at its current value. FDI has a negative and significant effect on rGDP both at its current and lagged value. From the empirical results it can be concluded that external finances support the process of economic growth hence there by support the process of poverty reduction in Ethiopia in the long-run. Absorptive capacity, institutional and bureaucratic quality should be improved to alleviate the inefficiencies of external finances in economic growth in the short-run and maximize the benefits earned from external financial resources. Key words: external finance, rGDP, remittance, grant, external debt, FDI, ARDL
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    Effect of Access to Health Services on Poverty in Ethiopia
    (Addis Ababa University, 2022-06) Iranfechisa Lechisa; Berhanu Denu (PhD)
    The importance of good health cannot be under estimated. However, presence of high poverty rate can lead to lack of health care service and vice versa, thus ,poverty reduction and improvement of health care access are important in ensuring enjoyment of good health . Despite Ethiopian commitment to reduce poverty and improve health status of her citizen, poverty remained high over 22 million people are living below national poverty line. Ethiopian health indicators have also not been impressive. Infant mortality rate for instance 29.5 death per 1,000 live birth, maternal mortality rate remained high at 401 death per 100,000 live birth. This poor performance in the health indicates that the country need to address the health challenge otherwise it will miss on the developmental goal by 2030 .this study , therefor , was too investigate the relationship between access to health care and poverty in Ethiopian . The study employed non-experimental pooled cross-sectional research design. The study used Ethiopian demographic and health survey (EDHS) data collected 2005, 2011 and 2016. To achieve the main objective , the study used simultaneous regression model, the specific objective was addressed usingdescriptive analysis method .study finding showed that there was relationship between access to health care service and poverty ,increase in the access to health care service , which implies reduction in poverty , due to increased wealth , individual are able to afford health care and hence they easily access health service more and motivate individual to seek health care service from provider who give quality service lead to improved health status and make productive. Thus although Ethiopia missed some health related development Goal , if access to health service is addressed, the country can do better in its efforts to achieving the sustainable development goal and the country’s development plan ,Ethiopian vision 2030 . KEYWORDS; Access to Health Service, Poverty, Simultaneous Equation Model
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    Adoption of Coffee Technologies and Their Impact on Annual Yield in Jimma Zone South Western Ethiopia
    (Addis Ababa University, 2022-01) Megdelawit Temesgen; Sisay Debebe(PhD)
    Sector of agriculture plays a significant role in Ethiopian economy. Ethiopia has huge potential to increase coffee production as it endowed with suitable elevation, temperature, and soil fertility, indigenous quality plantation materials, and sufficient rainfall in coffee growing belts of the country. Adoption of improved coffee varieties and slashing with a recommended period of time together have a significant effect on coffee production. The study was aimed to see the determinant of adoption of coffee technologies and their impact on annual yield of coffee in Jima zone south western Ethiopia. 196 sampled households from three woreda in the zone and 430 plots of 196 farmers household is considered in the survey. This study develops a multinomial logit and a multinomial endogenous switching regression model to see determinant of adoption and impact respectively. The study revealed four major results. First adoption rate and intensity of coffee variety is greater than the management practice. Second, adoption of coffee technologies constrained by different factor like land shortage, inaccessibility in technologies, lack of information and high cost of labor constraint farmers in adoption coffee technologies in addition to these constraints the disease and weeds which faces in farmers land leads them to replace coffee by chat. Third, from the multinomial logit model farmers adoption of coffee technologies determined by three major category these are farmers resource factor, the second determining factor is the institutional factor, the third factor farmers specific characteristics. Fourth, greater annual coffee yield obtained from simultaneous adoption of both improved coffee variety and management practice. This implies that policy makers, coffee breeders, extension service provider and other stakeholders promoting a combination of technologies can enhance annual coffee production. Key words: coffee technologies, yield, multinomial model, southwestern Ethiopia
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    The Nexus Between Economic Growth and Passengers Air Travel Demand in Ethiopia :The Case of Ethiopian Airlines
    (Addis Ababa University, 2022-06) Sinafik Asegid; Sisay Debebe (PhD)
    Despite the fact that various studies have proved the connection of air transportation and economic activities, their dynamic short-run and long-run interactions and causality varies between countries and it remains complicated. So, the major goal of this study is to evaluate the nexus and direction of causation between economic growth and air travel demand (domestic and international) in Ethiopia by using ARDL model, pair-wise granger and modified Wald causality tests for the period 1991-2020. Furthermore, for the study period, the study looked at the short-run and long-run dynamic relationship between economic growth, passenger air travel demand, and selected variables (Consumer price index, international tourism receipts, foreign direct investment inflow, official exchange rate and education). Two distinct models were built in this study using air transport indicators, economic growth indicators, and selected factors. The relationship between domestic air travel demand, economic growth, and selected variables was examined in the first model, while the relationship between international air travel demand, economic growth, and selected variables was analyzed in the second model. The results of the ARDL-bound test shows a long-run co-integrating relationship between air travel demand (domestic and international) and economic growth in Ethiopia. The result of causality also shows that, for domestic air travel demand there exist bi-directional causality both in the short-run and long-run, and for international air travel demand, there exist short-run bidirectional causality and uni-directional causality from air travel demand to economic growth in the long-run. Furthermore, domestic air travel demand is only responsive to economic growth in the short term, while economic growth, foreign direct investment, the consumer price index, and international tourism receipts are all relevant in the long run. Economic growth, foreign direct investment, education, the consumer price index, international tourism receipts, and the official exchange rate all play a role in international air travel demand. Finally, the researcher recommended raising income, maintaining Ethiopian airlines' competitiveness by expanding bilateral and multilateral agreements, building airport infrastructure (increasing the number and quality of international airports in the country), and easing bureaucracy for foreign investors, increasing tourism sites in the country, and lowering consumer goods prices to improve Ethiopia's air travel demand performance. Keywords: Air travel demand, Economic Growth, Short-run and Long-run dynamics, Direction of causality, ARDL Model, Bilateral and multilateral agreements, Airlines Competitiveness, easing bureaucracy.
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    Factors Affecting Smallholder Farmers’ Access to Agricultural Extension Services: The Case of Sodo Zuria Woreda, Wolayta Zone, Southern Ethiopia
    (Addis Ababa University, 2022-06) TesfayeTadesse; Berhanu Denu (PhD)
    The study examined the factors affecting smallholder farmers’ access to extension services, in the case of soddo zuriaworeda, wolaita zone in the southern part of Ethiopia. A multi-stage sampling technique was employed and 100 sample households were selected by using a formula for sample size determination.Both quantitative and qualitative data types were collected fromprimary and secondary sources. The data surveywerecollected usinghouseholds survey, key informant interview, focus group discussion,structured questionnaire, and checklists. The analysis was employed usingboth descriptive statistics and binary logit model.The resuls were presented in the form of tables and graphs through frequencies, percent, mean and standard deviation as well as statistical tests such as chi-square,. The result showed that out of 100 sample farm household heads, 28 do not access agricultural extension services due to weak links between farm households and agricultural extension agents, lack of effective coordination and communication between those farmers and concerned institutions i.e., agricultural extension, credit institution and other local administration.On the other hand, lack of agricultural input; (oxen holed, fertilizer and improved seed, ..), the limited size of farmland, illiteracy, lack of knowledge to use information technology,and distance to extension center are the major reasons (challenges) that made sample households’ unable to access agricultural extension package. The regression model result revealed that the size of farmland, dependency ratio, the annual nonfarm income of the household, access to credit, number of oxen, livestock owned, experience to use fertilizer, soil characteristics, price of farm input and household willingness to access extension service were found to significantly determine the smallholder farmers access to extension service at different significance levels with the expected sign. The result also revealed that the size of farm and grazing land, number of oxen, soil fertility, and experience in using fertilizer found a strong and positive effect on access to extension services. Thus, based on the above results it is possible to conclude that small farm households’ access to agricultural extension services is not effective to result in an efficient agricultural productivity in the study area. Therefore, policy measures that could avert the above challenges are recommended to include measures like empowering and strengthening smallholder farmers’ training, awareness,prizes for the successful ones, and field visitwith practical training (demonstration), delivering and facilitating basic agricultural inputs through agricultural extension services. Keywords:small hold farmers’ agricultural extension service, binary logistic model.
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    Effectiveness of Monetary Policy on Economic Growth in Ethiopia
    (Addis Ababa University, 2022-06) Tilahun Binalf; Sisay Debebe (PhD)
    This study examines the effectiveness of Monterey policy on economics growth in Ethiopia using time series data collected from 1990/92-2020/21. To analyse the data both descriptive statistics and econometrics model such as using Autoregressive Distributive lag (ARDL) model were applied. The main findings of the model attested that money supply contributes positively and significantly to economic growth in the short run, while in the long run the opposite is the case. Other independent variables such as gross capital formation and human capital have significant positive impact on economic growth in the short run. Whereas, terms of trade and trade openness have significant negative impact on real GDP in the short run; and insignificant negative impact in the long run. Also, reel effective exchange rate, labour force, capital formation, human capital and inflation have positive impact. Total factor productivity, terms of trade and trade openness have negatively affected output in the short run. Besides, The ECM has the expected negative sign with significant coefficient, showing the possibilities of adjustment of 60% of disequilibrium in the subsequent period. The study recommends that the NBE should ensure that the level of money supply growth is consistent with the inflation target and implements a prudent market- driven interest rate policy. And also the Bank should stabilize foreign exchange market and well-functioning money and financial markets should be also developed in the country. Keywords: Monetary Policy, Economics Growth, Money supply, ARDL, ECM
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    Analysis of Vulnerability to Food Insecurity in Rural Households’ of Ethiopia
    (Addis Ababa University, 2022-06) Tsige Zeray; Sisay Debebe (PhD)
    This study examines Analysis of vulnerability to food insecurity in rural households of Ethiopia, using a sample data of 3115 rural households from the Ethiopian socio economic Survey (ESS). Calorie method was employed to determine food insecurity and vulnerability. In addition to descriptive statistics, GLS and the Logit models was used to analyze the data. The Results indicates that, Majority of the households were found to be food insecure, which is 62.95% were found to be food insecure (1961 out of 3115) whereas the rest 37.05% of the households were found to be food secure. Furthermore, the estimated logit model result revealed that Rainfall shock, Death of livestock were positively and significant influence current food insecurity status of household, on the other hand, age of household head, Education level of the household head, annual household farm income, participation in off farm activity, access to credit and remittance were negatively affected the extent of households’ food insecurity. General Least Squares regression results indicate that Total land holding in ha of household head has a significantly positive correlation with calorie intake and Households access to credit significantly increase expectation of food consumption. Empirical finding also shows that rain fall shocks (environmental shocks) have larger impact on vulnerability to food insecurity. Based on the intensity of their vulnerability, households were grouped highly vulnerable-food secure (18.4 percent), and low vulnerable-food secure (45.84 percent).Overall, about 54.4 percent of households were categorized as vulnerable to food insecurity. Key words: Vulnerability as expected poverty, Vulnerability to food insecurity, Food insecurity, Ethiopia
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    Determinants of Foreign Direct Investment Inflow to Ethiopia: A Time Series Analysis
    (Addis Ababa University, 2022-01) Yalew Mengistie; Mulugeta G/Mariam (PhD)
    The main aim of this paper is to identify the key determinant factors of FDI inflows to Ethiopia for the period 1991 to 2020 using autoregressive distributed lag model (ARDLM) with Error Correlation Methods. The empirical results reveal that trade openness, domestic market size, inflation rate, and political stability and absence of violence are the key determinant factors of FDI inflows to Ethiopia. Moreover, human capital and government effectiveness are also important determinant factors of FDI inflow in the short run, while infrastructure facility is a fundamental determinant factor in the long run. Among these factors, at 5% level of statistical significance, trade openness, and domestic market size affect FDI inflow positively both in the short run and long run, whereas inflation rate, and political stability and absence of violence have negative and statistically significant effect in both cases. On the other hand, government effectiveness and human capital associated with FDI inflow to Ethiopia positively in the short run. Besides, infrastructure facility development has statistically significant effect on FDI inflow in the long run. Hence, these findings implies that minimizing barriers to trade, improving domestic market size and infrastructure facilities, creating more stable macroeconomic and political environment, giving due attention to well-organized system of education, and having effective governance system are also crucial to attract more FDI to Ethiopia. Keywords: FDI, Ethiopia, Determinant, ARDL Model, Bound Test, ECM
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    Determinant of Export Performance: Case of Agro Processing Industries in Ethiopia Using Time Series Analysis
    (Addis Ababa University, 2023-02) Getachew Andualem; Berhanu Denu (PhD)
    Globalization forces countries to take their comparative advantage in the global market. Export plays a vital role in economic development of a nation as well as for the development of the particular exporting companies. Although, the benefits derived from export of agro processing products in an increasingly globalized marketplace are enormous, but for many industries, exporting agro processing is constrained by numerous challenges. The purpose of the study was to investigate the major determinants of the export performance of the four selected commodities of Ethiopia namely: leather & leather products, meat and meat products and fruits & vegetables and beverage products. The paper empirically examined the export performance and its major determinant factors in the Ethiopian context using time series data for the period 1991 - 2021 using a secondary data. To analyze the relationship between the export commodities and their determinants, gross domestic products (GDP), foreign direct investment(FDI),real effective exchange rate (REER) and trade openness (TOP) ,inflation and infrastructure (road) were used, VAR model that was applied and estimating by ordinary least square (OLS) regression analysis with Time series data data. The result from econometric analysis revealed that the infrastructure (paved road in kilometer) is the only variable significantly and positively affects the export of the selected commodities. Similarly, GDP positively and significantly affects the export performance of leather & leather products and fruit & vegetable products .Foreign direct investment (FDI) has positive and significant effect on the export of meat, fruit & vegetable and beverage products. While trade openness (TOP) has negative coefficient and significant effect on the export of leather & leather products, meat and beverage products, but it has positive and statistical significant with on the export of fruit& vegetable products. Since all the export commodities were positively impacted by infrastructure (road), increasing quality and coverage of road development would bring a vital outcome for increasing the export performance of the agro processing commodities, which can be regarded as the key finding for the research. From the result, the study concluded that the export performance of the agro processing industries in Ethiopia have been affected by the independent macroeconomic variables. In general, due its potential the export of the agro processing product is increasing time to time. This is due to the fact that the government has prioritized the sector and as a result the agro processing sector is growing. But still there are various external and internal microeconomic and macroeconomic factors that are adversely affecting the export performance of the sector.