Evaluation Of Ethiopias Bilateral And Potential Exports In The Middle East A Gravity Model Approach

The study analysis the major determinants of Ethiopian's bilateral exports and exploresrnthe unexploited export potentials that the country may have in the Middle East using tworndifferent methods.rnFirst, the augmented gravity model estimated by G2SLS estimation technique using 13rnyears data of 15 exporting partners. The estimated coefficients then used to analyze thernexisting bilateral export and predict the export potential that the country could have inrnthe three Middle Eastern countries. Accordingly, GDPpc of both exporting and importingrncountries found to have positive and significant impact on Ethiopia's bilateral exportsrnwhereas, distance between countries negatively affect their bilateral trade. In this light,rnthe export potentials of the country are estimated using the estimated coefficients of therngravity model. Accordingly, Ethiopia has the highest unexploited potential in UA. E andrnsignificant amount in Saudi Arabia.rnSecondly, Using the lTC measure, the potential to increase Ethiopian's export in theserncountries and the top 20 commodities that highly contribute to increase the county'srnexport potential are also identified. The finding of this index shows that gold, coffee andrntea, fruits and vegetables, live animals, meat and meat preparations and cut flowers arernamong the products that have the highest potentials to increase Ethiopia's Export in thernMiddle East.

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