Determinants of Ethiopian Exports
No Thumbnail Available
Date
2008-06
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
A.A.U
Abstract
The objective of this study is to examine the determinants of the
demand for and supply of Ethiopian exports. It is conducted using
time series econometrics. The estimation technique used is the
Stock Watson dynamic OLS (DOLS) approach. The variables used
as determinants of demand are: the real effective exchange rate,
real income of trading partners (Real GDP of Ethiopia's 4 major
trading partners) and dummy variable for openness (since
Ethiopia followed varying policy regimes). On the other hand, the
variables used as determinants of export supply include: Gross
Domestic Product, diversification, Dummy for government subsidy
on Export (i.e., duty drawback and credit given to exporters) and
the ratio of price of exports to domestic price (i. e. px/ pd).
The estimated results indicated that real effective exchange rate
and real income of trading partners have positive and significant
effect; whereas openness has negative effect on the demand for
Ethiopia's exports. On the supply side, diversification, Gross
Domestic Product, Export credit and Duty drawback scheme of
exportable products has positive and significant effects. However,
relative price (the ratio of price of exports to domestic prices) is
negatively related to the supply of exports suggesting that some of
the commodities are diverted to the domestic market as their
prices increase. Policy measures taken have also contributed
positively to the development of the export sector. This can be seen
from the positive effects of duty drawback and credit given to
exporters.
Description
Keywords
Ethiopian Exports