Determinants of Agricultural Exports in Ethiopia
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Date
2005-06
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A.A.U
Abstract
In addressing the dismal performance of the export sector in
Ethiopia, it is important to look at the percentage contribution of each
sector and also the factors that affect the growth of the respective
sector. Analysis of sectoral contribution to international trade confirms
that in Ethiopia agriculture is found to be the single most important
sector in terms of revenue generation contributing over 80% of foreign
exchange earnings. Thus, in trying to disentangle the effect of each
policy instrument, we have used secondary time series data for 30
years where analysis of factors behind growth of the sectoral
contribution suggests that output has been responsive both to price
and structural factors emphasizing the importance of both factors as a
tempo for growth in the agricultural sector. Results from the study
indicate that price policy instruments such as real exchange rate
devaluation and institutional factors such as fertilizer consumption do
have a significant and positive impact on aggregate agricultural
exports. Results from individual export product (chat) are also in
conformity with the above result suggesting that policy makers should use both to expand export from the sector.
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Keywords
Agricultural exports, Supply Response, Price Factors, Structural Factors, Stationarity