Effect Of Logistic Performance On International Trade Performance: The Case Of Ethiopian Major Export Goods
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Date
2020-06
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Addis Ababa University
Abstract
Trade is the most important way of economic growth for any country. The continuous growth in
world trade depends on the efficiency of trade support structures such as the logistics services.
However, for most African countries, inadequate infrastructure and poor transport network make it
difficult for their manufacturers to participation in new global outsourcing and just in time production or
ensure reliability or flexibility in the supply of the goods. While, logistic systems are strongly connected
to trade gain growing importance to describe the competitiveness of countries in a globalized world. An
increase in world trade simultaneously requires a progress in transport technologies and qualitative
logistics are a necessary condition for foreign investors to operate efficiently. The aim of this paper is to
examine the contribution of logistics for export trade of major export goods of Ethiopia and to show the
importance of logistics for an enhancement in investment and trade. The analysis also has extended by
investigating if the specific dimensions of logistics performance (logistics specificities) matter for
international traders. An empirical approach was designed where secondary data is used to perform a
panel data analysis. The panel consists of multi-year data for ten Ethiopian export trade partner
countries over the years 2007-2016. The Logistics Performance Index includes six different variables
such as infrastructure, quality of logistics service, customs, international shipment, track and trace and
timeliness. Furthermore distance between sample country, GDP and populations were considered as
control variables. The panel data analysis allows measuring the concrete impact of each variable on
trade. The researcher used explanatory research design, and adopts a quantitative longitudinal research
approach. Then inferential statistics was used to make inference the effect of explanatory variables on
dependent variable (Export trade). Finally based on the findings result the researcher have been reached
conclusions and gives recommendations in which area of logistics an improvement could be necessary.
The results show that there is a statistically significant relation between logistics and trade. Customs
clearance, Transport infrastructure, especially the quality of roads and ports, and timeliness were found
to be the most important factor affecting exports and imports. The study was able to show that an
increased logistics capability of country leads to an increase in trade volumes. The findings from the
panel data analysis identified four out of six logistics variables those show a significant positive effect on
Ethiopian major export goods. In general the researcher concluded that the study overall hypothesis
could be accepted as logistics influences the trade performance of a country. Hereafter, the paper fills the
gap in literature by showing the need of a high quality logistic sector and gives incentives in which area
of logistics an improvement could be necessary. Finally, A recommendation for decision makers, policy
makers, and concerned bodies has been forwarded to give an emphasize for the urgent need of
improvement on the logistic performance in order to boost the country export performance as well as to
be competent in international trade market.
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Keywords
Trade performance, Logistics Performance Index, Custom, Transport, Shipment