Economic Impact and Determinants of Export: The Case of Ethiopian Textile and Apparel Industry
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Date
2010-06
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Addis Ababa University
Abstract
Ethiopian industrial development policy has put the textile and apparel industry on the forefront position to accelerate the country‟s industrialization process. The availability of huge labour force, the utilization of abundant raw material , the growing demand of this industry‟s product (as the basic human need) and the international goodwill to provide preferential and differential market access to this industry help the sector to play a significant role on the development of the country‟s economy and on mitigation of poverty. This paper examines the economic impact of textile and apparel industry, the utilization of preferential and differential market access and the determinants of the export performance.
The descriptive analysis covers the period 1999 to 2009. The result of the descriptive analysis reveals that the economic impact and the preferential market utilization of the textile and apparel industry are very limited. The time series econometric analysis covering the period 1971/72 to 2008/09 employed Eviews 5 (a computer program as a tool for econometric analysis). The econometric analysis result shows that labour cost and trade openness (liberalization) have positive impact on the export performance of the sector, whereas cotton export and exchange rate have negative impact.
As this study tries to indicate, the government supports only those who engage themselves on export market. However, this is not satisfactory and successful for the sector‟s development. So one of the major conclusions of this study is that unless the government revises its policy direction towards developing and supporting the sector (boost the sector investments), the current “artificial” export growth of the industry will be short-lived and ultimately results in unsustainable export growth.
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Economic Impact and Determinants of Export