| Abstract: | Despite the enormous efforts made by the Government of Ethiopia to address the export sector's
issues over the past 20 years, the nation has experienced a trade deficit and a budget imbalance.
As a result of the growing disparity between export and import values, Ethiopia's trade balance
has been getting worse over time. Therefore, the main objective of the study was to examine the
determinants of Ethiopian agricultural exports using a dynamic panel data approach. Specifically,
the study was expected to assess the trend, composition, and the major destinations of Ethiopian
exports, to identify key determinates of the performance level of agricultural volume and value of
export and to identify systemic and operational bottlenecks of agricultural export. The study used
panel data for the period 2000-2020 for Ethiopia's top 29 agricultural export commodities. The
commodities were chosen based on the basis of volume and value of export and availability of
required data during the study period. Using the natural logarithm of agricultural export value of
each commodity, and the selected the demand and supply side determinant factors of agricultural
export of the commodity-like lag of agricultural export commodity, RGDP, exchange rate,
consumer price index, labor force, total road network coverage, corruption index, foreign direct
investment, indirect tax revenue, total domestic saving, and trade openness. The result showed that
all variables were significant factors that determine Ethiopia's agricultural commodity export.
From these determining factors lag of agricultural export, economic growth, Foreign Direct
Invest, and Terms of Trade have a positive and significant effect on Agricultural commodity export
at one-step system GMM. Whereas the remaining variables are exchange rate, labor force, Gross
Domestic Saving, Road, indirect tax revenue, consumer price index, and corruption index have a
significant and negative effect on agricultural export. The researcher concluded that lowering
corruption and indirect tax on export, and poor quality of the road, gross domestic saving which
hinders the agriculture sector (lack of agriculture financing) would motivate private investment in
the export sector. Besides, controlling rapid population growth would decrease domestic
consumption of exportable commodities and would increase export surplus. Finally the researcher
recommended that a concerted effort should be directed towards productive channels of
agricultural commodity in the economy so as to enhance sustainable economic growth through
increased agricultural commodity export. |
