Determinants Of Agricultural Exports In Ethiopia

In addressing the dismal performance of the export sector inrnEthiopia, it is important to look at the percentage contribution of eachrnsector and also the factors that affect the growth of the respectivernsector. Analysis of sectoral contribution to international trade confirmsrnthat in Ethiopia agriculture is found to be the single most importantrnsector in terms of revenue generation contributing over 80% of foreignrnexchange earnings. Thus, in trying to disentangle the effect of eachrnpolicy instrument, we have used secondary time series data for 30rnyears where analysis of factors behind growth of the sectoralrncontribution suggests that output has been responsive both to pricernand structural factors emphasizing the importance of both factors as arntempo for growth in the agricultural sector. Results from the studyrnindicate that price policy instruments such as real exchange raterndevaluation and institutional factors such as fertilizer consumption dornhave a significant and positive impact on aggregate agriculturalrnexports. Results from individual export product (chat) are also inrnconformity with the above result suggesting that policy makers should use both to expand export from the sector.

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