An Empirical Analysis of the Effects of the African Growth and Opportunity Act (AGOA ) Case of Ethiopia's Exports
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Date
2010-05
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A.A.U
Abstract
The us congress approved the African growth and opportunity act legislation in 2000gc to
assist the economies of SSA and to improve economic relations between the us and the region.
Ethiopia qualified for the act in October of the same year. This paper has empirically examined
the effect of AGOA on Ethiopia's exports to us. Using a dataset that ranges from 1980-2007
GC, descriptive statistical techniques and error-correction time series econometric modeling
have been employed to analyze the effect of AGOA on Ethiopia's export. The descriptive
analysis shows that Ethiopia's export to us in post-AGOA years has a clear positive trend, in
contrast to the pre-AGOA period export which had declining tendency. The analysis has also
reviled that Ethiopia is not benefiting from the act as much as other African countries. The
error correction model also shows that the country is not benefiting from the act. The model has
revealed statistically significant and positive impact of Ethiopia's GDP on export to the us,
implying that the country should build its capacity to fulfill the quality and quantity standards of
the importing country The number of years elapsed since Ethiopia was declared eligible for the
act was also found to be positively affecting export to the us, being statistically significant as
well. It indicates the importance of experience gained by exporters in promoting export to us.
Hence, engaging the private sector by means of technical assistance provision as well as by
enhancing awareness on how to benefit from the act happen to be essential to further benefit
from the act. The data set suffers from post-AGOA years being short relative to the whole
sample and hence it is recommended that a disaggregated sector level study takes place to
further explore the effect, with the passage of time and with the availability of sufficient data in
the area of analysis.
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Keywords
African growth, Case of ethiopia's exports