DETERMINANTS OF AGRICULTURAL EXPORT PERFORMANCE IN ETHIOPIA

Abstract

The paper has assessed the major determinants of agricultural export performance in Ethiopia for the period 1984-2013. The study fully relays on secondary data that collect from annual reports and publications of Central Statistical Agency in Ethiopia, Ethiopian Ministry of Finance, and Development in Ethiopia, National Bank of Ethiopia, Ethiopian road Authority (ERA), global economy website, trade maps website and the World Bank. The methodology used was empirical test to identify the relationship between agricultural export performance and its main selected determinants. Co-integration and error correction approaches in the regression analysis were used. The results from the co-integration and error correction models bear that fertilizer input, road, domestic price, nominal exchange rate; have a positive relationship with agricultural export performance. On the other hand, terms of trade, world price, and gross domestic product have negative long-run impact. When it comes to gross domestic product, world price, road, and fertilizer input, it was found that they are statistically significant. However, nominal exchange rate, world price, terms of trade proved insignificant. Nominal exchange rate became positive in sign which was unexpected. Terms of trade, world price, road, and gross domestic price became negative in sign, which was unexpected. Based on the findings, it can be concluded that primary agricultural products dominate the Ethiopian export and this can be insensitive for agricultural export performance. It can be also recommended that policy makers should focus on all the determinants of agricultural export performance either price and non-price that directly affected the agricultural export performance of the country.