Determinants Of Ethiopias Bilateral And Potential Exports In The Emerging Countries A Gravity Model Approach

Exports are the drivers of economic growth in Ethiopia. Given their importance in the economy,rnit is necessary to analyze factors that are determining export flows between Ethiopia and itsrntrading partners. A gravity model is very important in the analysis of bilateral trade flows, andrnhas proven to be a useful 1001 in determining trade or export potential of a country. The purposernoj this study is to investigate factors that determine exports of Ethiopia using a gravity modelrnapproach. The analysis indicates that increases in importer's GDP and Ethiopian's GDP causernexports to increase, while distance is associated with a decrease in exports. Real exchange ratesrndo not have an impact on export. Ethiopia doesn't export more to countries where it shares arncommon border. The study shows that there is unexploited export potential to among others,rnChina, India and Brazil. These results are important for trade policy formulation in order ensurernthat Ethiopia's export potential is exploited in order to enhance economic growth.

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