The Determinants And Dynamics Of Aggregate Merchandise Imports In Ethiopia

Ethiopia imports goods and service s under serious foreignrnexchange constraint. Export ",earnings finance less than rnfifty percent of imports . For this reason there was excessrndemand for foreign exchange in the past four decades . Thernpurpose of this study is therefore, to characterize thernbehavior of demand and determinants of imports in Ethiopia .rnThe study used error correction and co integration as wellrnas descriptive analysis.rnrnIn the short run, one of the most important determinants ofrnaggregate merchandise imports in Ethiopia is found to bernforeign exchange availability in the form of internationalrnforeign exchange reserves. Economic activity (real GDP) ,rnthe relative prices (in this study the real exchange rate)rnhave no significant influence in the short run. However,rnall together with international reserves have significantrninfluence in the long run . The other important determinantrnof imports both in the short and long run is trade policyrnregime. Openness of the economy had given rise to magnifiedrnand accelerated growth in imports.rnrnOne important implication drawn from the analysis is thatrnthe need for export promotion and diversification measuresrnin order to fill the fast growing trade deficit.

Get Full Work

Report copyright infringement or plagiarism