Frontier Momentum: Ethiopia's Trade Ascendancy Capital Markets' Effect on Import-Export Trade Balance
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Date
2025-06-05
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A.A.U
Abstract
Ethiopia has experienced rapid economic growth in the past few years, yet the country's import -export
trade balance remains handicapped by funding gaps, infrastructural shortcomings, and regulatory
bottlenecks. This study examines how the progress of capital markets such as the creation of the Ethiopian
Securities Exchange could potentially end such issues. The research used quantitative analysis of 200
stakeholder primary questionnaire data and secondary data, the research assesses the degree to which
better access to finance, risk management instruments, and market transparency contribute to trade
outcomes. Foreign direct investment (FDI), trade infrastructure, exchange rate stability, trade policies,
foreign currency availability, capital market development, and ease of finance are analyzed using different
linear regression models. The results reveal statistically significant and positive correlations among
infrastructure upgrading trade balance, availability of finance, and capital market development. The
respondents demonstrated capital market capability to plug funding gaps and provided the most frequent
constraints as infrastructure and funds as significant impediments. The competitiveness of Ethiopia in
global trade is dependent on profound capital markets, relaxed regulation, and focused investment in
technology and logistics, as per the report. The implication from the evidence is that capital market
development is positively related to trade balance improvement, particularly in conjunction with
institutional change and investment in infrastructure. According to this analysis, the study suggests targeted
interventions to enhance the environment of the capital market and foster export-led growth. The
recommendations aim to help policymakers, investors, and private sector actors contribute to Ethiopia's
trade competitiveness and economic transformation.