International Competitiveness of Ethiopia's Leather and leather products industry to the EU-28 market
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Date
2022-09-06
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A.A.U.
Abstract
In our quickly developing globalized reality, the competitiveness of a particular national economy and its business environment is a critical factor for the economic, political and societal development of a country as well as for economic alliances. In the light of substantial improvement in export growth and changing internal and external economic environment. The aim of this paper is to investigate the major sources of export performance, the changes in international competitiveness and comparative advantages of Ethiopia's leather and leather products export to the EU-28 market and analyze the reasons for these changes for the period between (2009–2019).
The performance indicators employed for the study are two measures of specialization; the Revealed Comparative Advantage (RCA) and the Revealed Symmetry Comparative Advantage (RSCA) and a measure of competitiveness, the Market Share (MS) Index using yearly data from 2009 -2019. To infer competitiveness from the changes in export value over time, a first- level Constant Market Share (CMS) analysis was used to decompose the changes in export value into a structural effect, competitive effect and second-order effect. To augment this technique, an empirical analysis on the determinants of Ethiopia's leather and Leather products export was conducted using the Armington trade model by OLS regression on yearly basis, with quantity market share as the dependent variable. The result of the indices of specialization, shows Ethiopia has a comparatively high RCA in leather and leather products exports to the EU-28 over the selected economies during the period of study. This indicates that Ethiopia has a comparative advantage which is significant potential for specialization in leather and leather products export. In terms of competitiveness, Ethiopia market share value has declined over the study period. Judging by the operational definition of competitiveness, Ethiopia has been less competitive. The CMS decomposition of changes in export values indicates that the changes in export value of Ethiopia can be attributed to structural effect (growth of the market) mainly. The result of empirical analysis indicates that level of specialization and relative price ratio has a strong impact on the Quantity market share of Ethiopia in EU-28 market, on the other hand, exchange rate and trade agreements seem less important determinants for the success of Quantity market share in the target market.
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Keywords
Ethiopia Export, Export growth, market share, specialization, competitiveness, relative export price, Determinants of market share