Habtamu Adane (PhD)Shalemu Asnake2025-10-282025-10-282025-06-16https://etd.aau.edu.et/handle/123456789/7532This study examines the determinants of Ethiopia’s export earnings using annual time series data from the National Bank of Ethiopia (NBE) spanning 1991–2024, motivated by the country’s persistent underperformance in export earnings despite its economic potential. The research addresses the critical question: What factors explain Ethiopia’s export earnings dynamics, and how can policymakers enhance export performance to address foreign exchange shortages and drive structural transformation. The primary objective is to identify long-run and short-run determinants of export earnings to inform evidence-based policy interventions, employing Johansen cointegration and Vector Error Correction Models (VECM) to analyze relationships between export earnings and five key variables: real gross domestic product, terms of trade (ToT), trade openness, real effective exchange rate (REER), and infrastructure (proxied by real capital expenditure). Results indicate that in the long run, real gross domestic product, terms of trade, trade openness, and infrastructure significantly boost export earnings, while real effective exchange rate exerts a negative effect, reflecting competitiveness challenges from currency overvaluation. Short-run estimates align with expectations, showing positive impacts from all variables, including real effective exchange rate (consistent with the J-curve effect). Thus high and sustainable economic growth, improvements in infrastructural facilities, and maintaining a stable exchange rate policy as well as working to reduce trade constraint mechanism should be given due emphasis so as to improve Ethiopia's export earnings.enThesis