In this paper we have attempted to analyze the determinants of Ethiopia 50 trade flow withrnits major trading partners using the gravity model. We used panel data estimationrntechnique. The pre estimation Hausman specification test shows that fixed effect isrnfavoured for both export and import models. Moreover, both the theoretical fi-ameworkrnand Hausman test for endogeneity shows domestic GDP is endogenous in the exportrnmodel. Therefore, instrumental variable estimation is used to estimate the export modelrnwh1ie GLS is used for import model estimation. Post specification results show the majorrndeterminants of Ethiopia 50 export are domestic per capita GDP, trading partners per capitarnGDP, distance, trading partners trade policy, domestic infi-astructure, and domesticrninstitutional quality. All these detelwinants affect export positively while distance has arnnegative effect. The results also revealed that the major determinants of Ethiopia:SÂ· importrnare home GDP, partners GDP, and home institutional quality. Among the basic gravityrnvariables GDP works well in explaining import but not distance. The other most importantrnfinding is that variables that can be reflected in prices are little to W01* 1n determimngrnimport. The insignificant exchange rate and distance variables are examples for this. Inrngeneral, the study implies strong 1nstitutions, better infi-astructure and liberalized [radernpolicies are required so as to integrate the country with the rest of the world and therebyrnbenefit fi-om trade.