Modeling the Principal Export Commodities of Ethiopia (1970/71 - 2003/04)
No Thumbnail Available
Date
2006-07
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
A.A.U
Abstract
This study endeavored to model the principal export commodities of Ethiopia such as Coffee
Oilseeds. Khat. Pulses. Hides and Skins, Other exports and manufactured exports using time
series data/form 1970/ 71-2003/04. Since Ethiopia is price taker in the international commodity
market, emphasis is made to the supply side of the model. In addition, as the sample size we
employed is not sufficient to undertake the Johansen multivariate estimation technique, the short
run and the long run parameters are estimated using Engle- Granger error correction method.
The estimated models exhibited that export sector performance is highly vulnerable to
. Environmental shacks like rain/all in both short run and long run equations. The external shocks
such as terms of trade deterioration has also been scrutinized to be the fundamental factor in
determining the real principal commodity exports of Ethiopia in both short run and long run
equations. Similarly the real elective exchange rate index (REER) has been important variable
in most of the equations. Real intermediate imports which is comprised of raw materials, semi
finished goods and capital goods has been also found to be key factor for real manufactured
exports which is highly import intensive with 87 percent of raw material demands meet from
imports. on the other hand. the variable representing the influence of the road network on export
supply (TRL) has the expected sign for all the commodities although it is significant only Jar
Chat, Hides Skins and Oilseeds exports. Negative relationship between real exports of coffee
and real exports o/Hides and skins has been observed with the exchange rate gap disclosing that
when the gap widens export supplies of these commodities will be slumped. Errors and omission,
fertilizer sold. domestic consumption, real agricultural production, international trade loan for
export are vital variables in determining real export of commodities.
The repercussion of these results is the importance of diversifying the export sector both
geographically and commodity wise. The commodity diversification should be also embarked on
both horizontally and vertically. The Importance real effective exchange rate calls lip also the
real depreciation the Birr is imperative for competitiveness of all commodities that Ethiopia is
exporting for the interactional markets.
Description
Keywords
Export Commodities