Analysis of the Performance of Exports and Competitive Advantage for Growth and Development in Ethiopa: The Case of Sesame Seed
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Date
2021-11
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Addis Ababa University
Abstract
Based on the general objective of the research to describe and analyze the sesame seeds production, comparative advantage and export trade performance, competitiveness and export potentials of Ethiopia, from the perspective of the global and African regional levels, the study addressed four specific objectives, covering the period 1970 to 2018, by using market share, growth rate and related trade performance indicators, RCA and RSCA, export and import geographic concentration ratios analysis, econometric analysis using the ARDL model, and also carried out assessment of sesame seed export potential by utilizing UNCTAD export potential and gap methodology. For the ARDL econometric model post estimation diagnostic tests were also carried out. Africa’s share of world sesame seed export volume is about 65.5%, the leading exporters and their global export volume share are: Sudan (21.8%), Ethiopia (11.4%), followed by Nigeria (10.6%). Ethiopia’s RCA and RSCA have been higher though showing declines recently. Ethiopia’s leading export destination (61.9%) is China (also the world number one importer) and 20.4% to Israel (the world 6th importer of sesame seed). Ethiopia’s export concentration ratio was a high of 0.33, higher than the global average of 0.11; while the importer’s concentration ratio of the leading importing country, China, was 0.18, indicative of higher number of supplying countries, and implying higher competition in exporting to China. The ARDL econometric model analysis revealed that in both the short run and the long run, EXVAL (sesame export value) and EXVOL (sesame export volume) are affected statistically significantly by GDPeth (positively), REER (negatively), IMPDD (negatively). On elasticity results, both equation 1 (EXVAL) and equation 2 (EXVOL) are highly elastic to three of the four independent variables, namely, GDPeth, REER and IMPDD, both in the short and long run. Regarding Pairwise Granger Causality Test results, while both EXVAL and EXVOL does granger cause GDPeth, reinforcing the importance of export development as engine of economic growth, EXPPPRATIO granger cause EXVAL as well as EXVOL. Besides, EXVAL as well as EXVOL have bi directional causality with REER. Regarding the export potentials, Ethiopia has huge untapped export potential in sesame seeds, with current export to total world potential percentage share at 32.7% - an export untapped potential of 67.3%. Finally, towards maintaining and improving the comparative advantage & boosting the competitiveness of sesame seeds export, the study recommends: expanding sesame seed of production; improving product quality and value additions and the domestic marketing system (including ECX trading system); pursuing export market and product development and diversification; streamlining trade logistical and other domestic cost push factors; addressing the misalignment in exchange rate and the appreciating REER; developing and maintaining highly professional exporter companies, by implementing the identified respective strategies for action.
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Keywords
Sesame seed, Comparative advantage, Export analysis, End market analysis, ARDL, Export potential