THE IMPACT OF IMPORTED TEXTILE GOODS ON DOMESTIC TEXTILE INDUSTRIES IN ETHIOPIA

Abstract

Textile sector is an industry in which Ethiopia has a competitive advantage. The study found to assess the impact of imported textile goods on domestic textile industry in Ethiopia. In this study both quantitative and qualitative research approaches were used. To investigate the impact of textile import into Ethiopia in terms of price and volume on the domestic textile industry both primary and secondary data sources were used. The secondary data is a time series data of 16 years collected from Ethiopian Textile Industry Development Institute and the primary data collected from purposively selected 6 domestic textile factories through the application of open ended questionnaire to those key informants of the factories. Co –integration and error correction mechanism were employed to analyze the time series data and simple descriptive method was used to explain other serious problems faced by domestic textile industries. The result of the time series data analysis showed that the import volume has negative impact on domestic textile industry but import price has got positive impact. In addition, the analysis from qualitative data indicated that lack of skilled workers, poor technology, obsolete machinery, hard currency shortage, price pressure due to mass textile goods import, and low-tariff textile import were identified as serious problems the domestic textile industries in Ethiopia are facing. Reduce the volume of textile and garments imported into Ethiopia, conduct studies to improve the performance of domestic textile industries, replace old machineries, train manpower by working with universities and improve infrastructures are policy implications to Ethiopian government.