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Exploring the relationship between Trade Liberalization and Ethiopian Economic Growth

Abstract: 

Theoretical and empirical economic literature has shown that the economic growth of countries is related to both liberalization and international trade integration. The main purpose of this study is to apply this knowledge to the Ethiopian case and estimate the impact of trade liberalization on Ethiopian economic growth. The study has employed an Error Correction Model (ECM) for the time series data ranging from 1980 to 2016 to examine the economic effect of trade liberalization on the Ethiopian economy. To examine the structural break resulting from regime change, the model incorporated a dummy variable and the inclusion of the dummy variable reveals about the significant impact of policy change. The empirical results show that there are both short-term and long-term relationships between liberalization and economic growth. More specifically, trade openness has had a positive and significant impact on the economic growth of Ethiopia. Therefore, the government of Ethiopia should integrate and open the economy. Furthermore, it should design a more open trade policy so as to reap the benefits associated with integrating a country’s economy with that of the world.

Corporate Author: 
Ethiopian Economics Association (EEA)
Publisher: 
Ethiopian Economics Association
ISBN/ISSN: 
1993-3681
Primary Descriptors: 

Co-integration; Economic Growth

Secondary Descriptor: 

ECM;  Trade Openness

Geographic Descriptors: 
Ethiopia
Cataloge Date: 
10/02/2018
Broad Subject heading: 
Trade Liberalization-Ethiopia
Call Number: 
330.5 ETH JOU 2018
Serial Key Title: 
Ethiopian Journal of Economics
Publication catagory: 
Content type: 
Volume: 
XXVI
Year: 
October 2017
Publication date: 
2018-08-01 00:00:00
Number: 
2
Place of publication: 
Addis Ababa, Ethiopia
Type of material: 
Book
Current frequency: 
Semiannual