Factors affecting the coffee export competitiveness of Ethiopia- time series analysis
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Date
2024-06-05
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AAU
Abstract
The aim of this study involves Ethiopia’s competitiveness on coffee export and the factors
affecting it through the period of 1993-2022 observation. In this study Revealed comparative
advantage were employed to explain the level of comparative advantage and Revealed symmetric
comparative advantage were employed to assess the level of Ethiopia’s competitiveness on
exporting of coffee. To capture the factors and determinants of coffee the approach used is
ARDL model with Johansen co-integration test to investigate the long run and short relationship
between the coffee export competitiveness with domestic production of coffee, world production
of coffee, world price of coffee, foreign direct investment inflow stock, the real effective exchange
rate, and the total volume of coffee export. As a result, the approach explains that there is both
short run and long run relationship between the competitiveness and the explanatory
independent variables. The analysis pointed out that in the long run the extent of domestic
production of coffee and total export volume is significant and positively affecting the
competitiveness. However, world price of coffee, and the real exchange rate have significant and
negative effect to the competitiveness. But the FDI and world production of coffee is insignificant
and negative effect to the competitiveness. On the other hand, in the short run the domestic
production of coffee has a significant and positive effect to the competitiveness. And world
production of coffee, world price of coffee, and the real effective exchange rate has significant
and negative effect to the competitiveness. The FDI has negative and total export volume has
positive effect but insignificant effect on the short run