Determinants of Export Performance of Ethiopia's Top Export Commodities: A Time Series Analysis
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Date
2023-06-09
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AAU
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Abstract
Export Enhancing foreign currency inflow and strengthening the export sector, which will have a favorable effect on all other sectors of the economy, can make the export sector the backbone of the economy and help stabilize it.. However, Ethiopia's economy has poor export performance, the export industry is dependent on simple and limited items, there is no market diversity, and product prices fluctuate. The main objective of the research is to investigate the broad-scale factors that influence Ethiopia's top export commodity export performance. The long-run and short-run models were estimated using a quantitative research strategy, more specifically the descriptive research method. In order to determine the long-term associations between the variables, the co-integration of the time series data was
carried out using the ARDL approach. The analysis found that although the nation's export performance increased over time, this change was inadequate to stabilize the economy. The country's export activity is inconsistent, and as a result of this inconsistent export activity, the market is experiencing high levels of inflation and a scarcity of foreign currency. The research revealed that the Real Effect Exchange Rate (REER), Export Diversification, Market Size, Economic Openness (I XGDP), and Infrastructure variables
had a positive and significant impact on the export performance of the nation in the long run economic activity. Long-term export performance is influenced by foreign direct investment (FDI) in a positive but not very significant way. The country's export performance is positively and considerably impacted in the short term by infrastructure and foreign direct investment.. It has been determined that the country's exports are insufficient to establish reliable sources of foreign currency inflow. A small number of basic agricultural items form the foundation of the export. Based on the findings, the study suggests that the nation work on export diversification, change the trend of exporting primary products by adding value to export products, change the focus to manufacturing and industrial sector market access facing new markets, use various economic integrations that have not been used effectively before that help the nation to trade with neighbors getting experience to enhance the export demand and to open the economy to strong foreign investment