Factors Affecting Export Performance in Ethiopia

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Addis Ababa University


Foreign trade in general and specially export is very essential for the overall development process of any country. However, when the case is to the Ethiopian economy, export remained at its poorest performance. Therefore, this study mainly aims at investigating the main macro and micro factors affecting export performance of Ethiopia. A Quantitative and qualitative research approach, particularly descriptive and co relational research method has been adopted to address the objectives. Furthermore, the standard OLS method of estimation, particularly ARDL approach to Co-integration is used to estimate the long run and short run models. The findings of the study indicate that the trend for export growth and the share of export to GDP in the pre 1990/91 have shown very erratic growths and full of ups and downs which lacked consistency. Similarly, in the post 1991/92 regim, though many incentives and measures have been taken, the export earnings are still less and trade deficit is still very significant and the export performance is questionable. It is also found that real GDP, openness of the economy and foreign direct investment are the variables that have positive impact and their effect is significant. However, real effective exchange rate and trade tax are among the variables that negatively affected the export performance of the country. But, infrastructural development and policy & regim changes have found to be insignificant and with no effect towards the export performance. Therefore, it is concluded that the export sector of the country lacks capacity to finance import and its growth rate is very erratic and its composition is limited to the agricultural products leaving the share of industrial products at its minimum. It is also concluded that most of the exporters in the country do not implement theoretically advocated marketing strategies. Thus, it is recommended that the government has to reconsider the incentives provided to exporters and follow on their effective implementation. Similarly, exporters should hire skilled and professional marketing advisors and the export investments should be further encouraged so that industrial products could be exported



Export performance, Determinants of export performance, Auto Regressive Distributive Lag Model