Economic Growth Capital Accumulation And Stability In Ethiopia.

This study tries to investigate the impact of capital accumulationrnand macro stability on economic growth of Ethiopia taking a seriesrnof data range from 1971 to 2006. result of co-integration test usingrnJohanson likelihood approach indicates that all explanatoryrnvariables which are entered in the model form long-runrnequilibrium. the study is also conducted test for weak exogeneity andrntest for zero restrictions on co-integrating vectors to determinerncausality relationship and level of significance among equilibriumrnestablished variables. the result indicated that real GDP positivelyrnand strongly associated with physical capital, but negatively andrnsignificantly with budget deficit and political instabilities. The- '""rnstudy could not find strong evidence which supports the existencernof macro instability in the long-run other than short-run impact.rnThe existence of war as indicator of political instability, adverselyrnaffects real GDP both in the long-run and short-run. In Ethiopiarncontext, physical capital is found to be more important than humanrncapital probably due to lesser human capital are accumulated in thernstock.

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