Evaluation of the Impact of Trade Preferences on Ethiopian Export: An Augmented Gravity Modeling Approach.
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Date
2008-06
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A.A.U
Abstract
To integrate least developed countries including Ethiopia in to international
trade market, African Growth Opportunity (AGOA) and Everything But Arm
(EBA) initiatives have been designed by U.S. and European countries
respectively. The purpose of these initiatives is to enhance and diversify the
export of the beneficiary countries. Therefore the purpose of this study is to
analyze the effects of these programs on Ethiopian export. The study employs
the fixed effect gravity model using panel data for the period 1974/75 -
2005/ 06 of annual data
.
The main findings of the study show that AGOA has negative contribution to
Ethiopian Export. This might be explained from both beneficiary (i.e. Ethiopia)
and granting country's limitation. Poor infrastructure, lack of skilled
manpower , poor public services, etc of Ethiopia is some of the limitation to
exploit the scheme. Whereas un stability of the program, rules of origin, non
tariff harries are some of the factors that hinders the exploitation of the
scheme.
The result of the study also indicates that the European Union initiative has
no significant effect on Ethiopian export. Like U.S. initiative this program has
also its own limitations, but still Ethiopia has to identify the drawbacks in
exploiting the program.
The policy implication of the finding is that to exploit the program Ethiopia
has to solve the drawbacks for her poor export performance. Especially she
has to use export diversification strategy, i.e. the government has to peruse to
diversify exportable commodities from agriculture to other products both
vertically and horizontally in order to be competitive . Since most of export
items relied on few primary products. In addition to this the government has to
give due attention to improve social capital, skilled manpower, public services
infrastructure etc.
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Keywords
AGOA,EBA,EXPORT