Globalization, Economic Growth and Poverty the Case of Ethiopia

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The objective of this study is to investigate the relationship between economic globalization, economic growth and Poverty and in additional to examine the interrelationship between economic growth, income inequality and Poverty in Ethiopia, using the time series data from 1980-2017 and employed Auto Regressive Distributed Lag model and Vector Error Correction Model in a time series economic framework. In the long-run the trade openness has significant granger causality in income inequality & growth rate RGDP and income inequality and economic growth has granger causality on poverty. In the short-run, poverty is strongly predicted by the first lag of growth rate of RGDP and FDI at five per cent, level of significance. In the short-run, error correction model was found to be negative and statistically significant at one per cent, level of significance this implies that the error correction term converged monotonically to the equilibrium path relatively quickly and high significance of ECM(-1) is evidence to the existence of established stable long run relation among the variables. This result indicates almost faster an adjustment around of disequilibrium of previous year’s shocks back to the long-run equilibrium in the current year.



Economic Globalization, Economic growth, Income inequality