DETERMINANTS OF AGRICULTURAL EXPORT IN ETHIOPIA

Abstract

Despite massive potential of agricultural production than other sub-Saharan countries, Ethiopia’s share in total world exports is still very low, amounting to 0.01% in 2010 (WTO, 2011). Ethiopia’s agricultural export performance has typically been portrayed as poor compared with other sub -Saharan African countries. According to IMF, 2017 Ethiopia has a small export base its exports-to-GDP ratio in 2015 was the fifth lowest in the world highly concentrated in primary products. The major objective of this research is to investigate factors that determine the Ethiopia’s agricultural export performance in the period 1983/84-2017/18. The study has reviewed agricultural export performance and examines the long run and short run determinants of agricultural export performance of the country. The long run and short run estimates are investigated using co-integration and error correction approaches respectively. The data is collected from NBE, ERA, CSA World Bank website, UNCTADSTAT and IMF and World Economic Outlook Website. The findings of the study revealed that in the long run agricultural export performance has found to be positively influenced by Inflation, foreign direct investment real effective exchange rate, trade openness, infrastructural development and fertilizer input. In the short run inflation and foreign direct investment have statically insignificant effects on the performance of agricultural export. All of the rest variables have statically significant impact on the agricultural export performance of the country. Maintaining high and sustainable economic growth, improvements in infrastructural facilities and increasing fertilizer import, and maintaining conducive and stable exchange rate policies as well as working to reduce trade restriction mechanism should due emphasis so as to improve Ethiopia’s export performance.