Determinants of Agricultural Export Product: Case of Sesame Seed Exports from Ethiopia

Abstract

This study is purposed on informing future trade policy decisions on how the sesame seed export can be improved in both volumes and value of exports. To achieve this, effort was made to identify and assess the magnitude and effects of key determinants of sesame seed exports from Ethiopia for the period 1970-2013 both in the short run and long run. The study involves separate consideration of value and volume of exports as explained variables, and sourcing of ways by which beneficial implications noted could be maximized for both variables, while minimizing adverse ones in the process. This study solely involves the use of secondary data obtained from different sources. Separate equation with value and volumes of exports as explained variables were estimated using Johansen cointegration and error correction method (ECM) for long run and short run relationship respectively. All descriptive and econometrics analysis was done through EVIEWS 5. Finally, both the short run and long run equation was tested for appropriate standard Gaussian assumptions, appropriateness of specification and stability of coefficients. Various factors were found to have a significant impact on values and volumes of sesame seed export amongst which: domestic production of sesame seed, terms of trade, net inflow of FDI are positively related in the long run. But, real effective exchange rate negatively related with both values and volumes of sesame seed. Export price of sesame seed only affects export values of sesame seed in the long run. The error correction term has also indicated that the short run equilibrium quickly reverted to the long run equilibrium for both values and volumes of export. The identified determinants will provide a guideline for future trade promotion in the sector. Accordingly, future strategy required to increase sesame seed export was recommended