Main menu

Export Diversification, Competitiveness and Economic Growth: the case of Ethiopia

Abstract: 
This paper examines the relationship between export diversification and economic growth in Ethiopia. We used annual data from 1976-2013 and timeseries techniques of cointegration and Vector Error Correction Model (VECM) to examine the long-run relationship and dynamic interactions among the variables. The results show the presence of a unique cointegrating vector among the variables. In line with theory and empirical literatures, our empirical evidence supports diversification led growth in Ethiopia. In addition, REER and RCA indices have been used to measure competitiveness, while Hirschman’s commodity concentration index (CCI) is applied to measure export diversification. As observed from the maximum numbers of commodities with comparative advantage in the world market and the high value of commodity concentration index (CCI), our export is highly concentrated on agricultural products. The policy implication from these findings suggest that, in order to sustain future economic growth under the static effect of multilateral and regional trade liberalization, Ethiopia should diversify its export commodities and develop greater social and economic cooperation with the rest of the world. The strategy of diversification would be different for the long run and short run period. In the short run increasing the volume of existing exportable items and horizontal diversification can be more appropriate while in the long run both horizontal and vertical diversification should be given attention.
 
Publisher: 
Ethiopian Economics Association (EEA)
ISBN/ISSN: 
978-99944-54-44-10
Primary Descriptors: 

Foreign Trade promotion

Secondary Descriptor: 

Economic Growth - Real Effective Exchange Rate

Geographic Descriptors: 
Ethiopia
Cataloge Date: 
09/30/2015
Broad Subject heading: 
Export Diversification
Call Number: 
330.963 PRO 2015
Serial Key Title: 
Proceedings of the Twelfth International Conference on the Ethiopian Economy
Publication catagory: 
Content type: 
Volume: 
I
Publication date: 
2015-06-01 00:00:00
Conference Place: 
EEA Conference Center
Place of publication: 
Addis Ababa, Ethiopia
Type of material: 
Book
Current frequency: 
Annually
Conference date: 
July 16 to 19, 2014