Abstract:
Despite encouraging improvements in recent decades, Ethiopia's export performance has
typically been portrayed as poor compared with other sub -Saharan African countries.
The major objective of this paper is to investigate factors that determine the export
performance of the country by using an econometric model for the period 1970/71-
2010/11. This study tried to review the export performance; trends and share of different
export items and examine the long run and short run determinants of export performance
of Ethiopia. The long run and short run estimates are investigated using Johansson cointegration and Vector Error Correction approaches. The data is collected from NBE
(2011), EEA statistical data base CD-ROM (2010), and WB and WDI (2011). The
findings of the study revealed that in the long run export performance has found to be
positively influenced by real effective exchange rate, openness, RGDP of home country,
infrastructural development and private credit as a ratio of GDP (financial
development). The RGDP of trading partner has found to be statistically insignificant.
Hence, the long run elasticities of export performance with respect to real effective
exchange rate, openness, RGDP of home country, infrastructural development and
private credit as a ratio ofGDP (financial development) are 0.7, 0.54, 1.7, 0.3 and 0.44
respectively. In the short run only last year openness has directly involved in enhancing
export performance of current year. Maintaining high and sustainable economic growth,
improvements in infrastructural facilities and credit access, 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.
