Determinants of Export Performance and Employment of Labor in Large and Medium Scale Manufacturing Industry of Ethiopia an ARDL Cointegration Approach
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Date
2015-11
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Addis Ababa University
Abstract
The objective of this study is to investigate the determinants of export performance and
employment of labor in large and medium scale manufacturing industry of Ethiopia using a time
series data from 1978/79 to 2012/13. In this study, effort has been made to identify the long run and
short run determinants of export performance and labor employment in large and medium scale
manufacturing industry of Ethiopia using an ARDL bounds testing approach and ECM to capture
both long run and short run relationships. The estimated results for the determinants of export
performance revealed that the market size of the home economy, Europe and domestic
infrastructure are positive and statistically significant determinants of export, while the market
size of Africa (excluding Ethiopia) and real effective exchange rates (REER) have a negative
impact on export of large and medium scale manufacturing industry of Ethiopia. But the market
size of the United States of America and the Far East are found statistically insignificant.
However, in the short run, the market size of the United States of America found statistically
significant which goes with the African Growth opportunity act though the market size of Far
East still insignificant. The market size of the home economy and domestic infrastructure are
positively significant not only in the long run, but also in the short run and the market size of Africa
and REER are also statistically insignificant in the short run. The speed of adjustment has the value
0.7959 with a negative sign, which showed the convergence of the export model towards its long
run equilibrium.
As for the, determinants of labor employment, the result shows that the skills of employee’s, export
and real lending interest rate are both statistically significant in the short and long run, while the
real wage rate has a significant effect only in the short run. Furthermore, both the value added
per person engaged, a measure of labor productivity, and efficiency are statistically insignificant
both in the long run and short run. The speed of adjustment in the employment model is 0.4554.
Finally, the major policy implication of this study is, prioritizing investments to words capital
goods and enhancing skill capacity of workers through short and long term trainings by the
manufacturers for the employee and empowers the managers
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Keywords
Export Performance