Research & Development

| Peer-Reviewed |

Export Performance of Agricultural, Food Commodities and Economic Growth in Ethiopia: Using Co-Integration Approach

Received: Mar. 17, 2023    Accepted: Aug. 01, 2023    Published: Aug. 17, 2023
Views:       Downloads:

Share

Abstract

The agricultural and export performance of the country determine the Economic growth in Ethiopia. However, Agricultural export performance, granger causality with GDP, labor and capital, the short run and long run dynamic relationship among the variables is not well studied, documented and updated. Therefore, the study aimed to examine influence of agriculture, trade, labour and capital to the economic growth. The analytical procedure applied were Engle-Granger for causality, Johansen Approach for co-integration and error-correction model. The results indicated that in the long run Ethiopian economic growth defined as positive function of agricultural exports, imports and capital, while population negatively affect the growth. In the short run, lagged gross domestic product explained positively the economic growth, while the agricultural imports, capital and population size influenced negatively. The result implied that the correction in one period draws back to the other period at speed of 41%. Therefore, diversifications, adopting labor intensive industries and improvement in fixed capital formation were policy directions that can stimulate growth of Ethiopia Economy.

DOI 10.11648/j.rd.20230403.14
Published in Research & Development ( Volume 4, Issue 3, September 2023 )
Page(s) 90-101
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Agricultural Commodities, Export, Import, Economic Growth, Co Integration, Error Correction

References
[1] Adeel Saleem And Maqbool Hussain Sial. 2015. Exports-Growth Nexus in Pakistan Cointegration and Causality Analysis. Pakistan Economic and Social Review Volume 53, No. 1, pp. 17-46.
[2] Adrian Wood and Jörg Mayer. 2001. Africa's export structure in a comparative perspective. Cambridge Journal of Economics, Vol. 25, No. 3, Special Issue on African Economic Development in A Comparative Perspective, pp. 369-39.
[3] African Development Bank group. 2018. East Africa Economic Outlook. Macroeconomic developments manufacturing’s comparative advantage and competitiveness. ISBN 978-9938-882-69-8 [electronic].
[4] Ahmed Kasim, Burhan Ozkan and Ramu Govindasamy. 2018. Analyzing the Export Performance of the Horticultural Sub-Sector in Ethiopia: ARDL Bound Test Co-integration Analysis. Horticulturae, 4, 34.
[5] Alaro Biramo Hailegiorgis. 2012. The Effect of Export-Led Growth Strategy on the Ethiopian Economy. American Journal of Economics, 2 [3]: 50-56 DOI: 10.5923/j.economics.20120203.05.
[6] Alekaw Kebede. 2016. Determinants and Potential of Foreign Trade in Ethiopia: A Gravity Model Analysis. MPRA Paper No. 74509. Ethiopian Development Research Institute Addis Ababa, Ethiopia.
[7] Amin Abidella. 2011. Ethiopia’s Trade Potential in the Inter Governmental Authority on Development [IGAD]. Ethiopian Economics Association. Ethiopian Economics Policy Research Institute, Working Paper No 2.
[8] Andre C. Jordaan and Joel Hinaunye Eita. 2007. Export and Economic Growth in Namibia: A Granger Causality Analysis. South African Journal of Economics, Volume 75 issue 3, pp 540-547.
[9] Augustin Kwasi. 1990. Exports and Economic growth: The African Case. World development. Vol. 18. No. 16. pp. 831-835.
[10] Biyase, M. and Zwane, T., 2014. Is the export-led growth hypothesis valid for African countries? An application of panel data approach. Public and Municipal Finance, 3 [2], pp. 93-110.
[11] Berhanu Lakew. 2003. Prospects for Export Diversification in Ethiopia. National Bank of Ethiopia Economic Research Department. NBE Staff Working Paper ERD/SWP/007.
[12] Berihu Assefa and Kiflu Gedefe. 2016. An Economic Inquiry into Ethiopian Exports: Pattern, Characteristics, Dynamics and Survival. EDRI Working Paper 14. Addis Ababa: Ethiopian Development Research Institute. MPRA Paper No. 29427.
[13] Campbell, John Y. and Robert J. Shiller. 1988. Interpreting co-integrated models. Journal of Economic Dynamics and Control 12 [2-3]: 505-522.
[14] ECA [Economic Commission for Africa]. 2000. Africa in the Global Economy: Issues of Trade and Development for Africa. Africa. Knowledge Networks Forum Preparatory Workshop, 17-18. Addis Ababa, Ethiopia.
[15] Emilio J. Medina-Smit. 2001. Is the Export-Led Growth Hypothesis Valid for Developing Countries? A Case Study of Costa Rica. United Nations Conference on Trade and Development, Policy Issues In International Trade And Commodities Study Series No. 7.
[16] Emmanuel Anoruo and Sanjay Ramchander. 2000. Exports and Economic Growth: An Error Correction Model. CO 80523 Ph: [970] 491-66.
[17] Emmanuel Tambi, N. 1999. Co-integration and error-correction modeling of agricultural export supply in Cameroon. Agricultural Economics 20, 57-67.
[18] European Union. 2015. Export Performance and Poverty Reduction. Volume II Assessment of economic benefits generated by the EU Trade Regimes towards developing countries.
[19] Floribert Ngaruko. 2003. Agricultural Export Performance in Africa: Elements of Comparison with Asia. ESA working paper No. 03-09.
[20] Fouad Abou-Stait. 2005. Are Exports the Engine of Economic Growth? An Application of Co-integration and Causality Analysis for Egypt, 1977-2003. Economic Research Working Paper No 76.
[21] Francis Brian, Osaretin Sunday and Troy Iyare Lorde. 2007. Agricultural Export diversification and Economic Growth in Caribbean Countries: Co-integration and Error-Correction Models. The International Trade Journal, Volume XXI, No. 3.
[22] George Alogoskoufis and Ron Smith. 1991. On Error Correction Models: Specification, Interpretation And Estimation. Journal of Economic Surveys Vol. 5, No. 1.
[23] Gurmeet Singh. 2015. Causality Between Export and Economic Growth: A Case Study of India. Indian Journal of Accounting, Vol XIVII [1], ISSN-0972-1479.
[24] IMF [International Monetary Fund]. 2014. The Federal Democratic Republic of Ethiopia. Selected Issues Paper, Country Report No. 14/304.
[25] Kamil Sertoğlu, Sevin Ugural and Festus Victor Beku. 2017. The Contribution of Agricultural Sector on Economic Growth of Nigeria. International Journal of Economics and Financial Issues, 7 [1], 547-552.
[26] Khaled R. M. Elbeydi, Abdulbaset M. Hamuda, Vladimir Gazda. 2010. The Relationship between Export and Economic Growth in Libya Arab Jamahiriya. Theoretical and Applied Economics Volume XVII, No. 1 [542], pp. 69-76.
[27] Maddala. G. S. 1992. Introduction to Economterics. Second eddtion, specially priced student text. Macmllan pubilisng company, Neyork United States of America.
[28] Mishra P. K. 2010. The Dynamics of Relationship between exports and economic growth in India. International Journal of Economic Sciences and Applied Research 4 [2]: 53-70.
[29] Mohanty, S. K. 2012. Economic Growth, Exports and Domestic Demand in India: In Search of a New Paradigm of Development, Moving Toward a New Development Model for East Asia- The Role of Domestic Policy and Regional Cooperation. ERIA Research Project Report 2011-10, Jakarta: ERIA. pp. 191-222.
[30] Muna Sulaiman and Norma Md. 2009. An Analysis of Export Performance and Economic Growth of Malaysia Using Co-Integration and Error Correction Models. The Journal of Developing Areas, Vol. 43, No. 1, pp. 217-231.
[31] Musibau Adetunji Babatunde. 2012. Africa’s Growth and Development Strategies: A Critical Review. Africa Development, Vol. XXXVII, No. 4, pp. 141-178.
[32] Neena Malhotra and Deepika Kumari. 2016. Export Performance and Economic Growth in East Asian Economies – Application of Co-integration and Vector Error Correction Model. Eurasian Journal of Business and Economics, 9 [18], 135-152.
[33] Negussie Zeray and Ashebir Demie. 2016. Agricultural Food Export Performance In Ethiopia: An Error Correction Approach. International Working Paper Series paper no. 16/5. ISBN 978-88-96189-45-0.
[34] Noula Armand, Sama Gustave and Gwah Munchunga. 2013. Impact of Agricultural Export on Economic Growth in Cameroon: Case of Banana, Coffee and Cocoa. International Journal of Business and Management Review, Vol. 1, No. 1, pp. 44-71.
[35] Paul Cipamba Wa Cipamba. 2013. The Export-Output Relationship in South Africa: An Empirical Investigation. Economics Research South Africa working paper 355.
[36] Sampathkumar. T and Rajeshkuma S. 2016. Causal Relationship between Export and Economic Growth: Evidence from SAARC Countries. IOSR Journal of Economics and Finance [IOSR-JEF] e-ISSN: 2321-5933, p-ISSN: 2321-5925. Volume 7, Issue 3.
[37] Sayef Bakari. 2017. The Impact of Vegetables Exports on Economic Growth in Tunisia. MPRA Paper No. 80722, 23: 12 UTC.
[38] Thomas I. Palley. 2011. The Rise and Fall of Export-led Growth. New America Foundation Levy Economics Institute, Working Paper No. 675.
[39] Torayeh, Neveen M 2011. Manufactured Exports and Economic Growth in Egypt: Co-integration and Causality Analysis. Applied Econometrics and International Development Vol. 11-1.
[40] Twumasi-Ankrah, S. and Wiah, E. N. 2016. Testing for Long-Run Relation between Economic Growth and Export Earnings of Cocoa in Ghana using Co-Integration Techniques”, Ghana Mining Journal, pp. 89-95.
[41] UNCTAD [United Nations Conference on Trade and Development]. 2004. Exports of service and economic growth in developing countries. The report has been prepared on Economic Division on International Goods and Services, and Commodities.
[42] Vinaye Ancharaz. 2011. Trade, Jobs and Growth in Africa: An empirical investigation of the export-led jobless growth hypothesis. A paper prepared for the 3rd ICITE Regional Conference on “Trade, Jobs and Inclusive Development in Africa, Gammarth, Tunisia.
[43] World Bank Group. 2019. Country Private Sector Diagnostic Creating Markets in Ethiopia, Sustaining Progress Towards Industrialization. World Bank Group and International Monetary Fund Spring Meetings 2019 edition.
[44] World Bank Group. 2017. Ethiopia’s Great Run the Growth Acceleration and How to Pace it. Public Disclosure Authorized. P 161-171.
[45] World Bank Group. 2014. 3rd Ethiopia Economic Update: Strengthening Export Performance through Improved Competitiveness. Public Disclosure Authorized. P 49-51.
Cite This Article
  • APA Style

    Zekarias Bassa. (2023). Export Performance of Agricultural, Food Commodities and Economic Growth in Ethiopia: Using Co-Integration Approach. Research & Development, 4(3), 90-101. https://doi.org/10.11648/j.rd.20230403.14

    Copy | Download

    ACS Style

    Zekarias Bassa. Export Performance of Agricultural, Food Commodities and Economic Growth in Ethiopia: Using Co-Integration Approach. Res. Dev. 2023, 4(3), 90-101. doi: 10.11648/j.rd.20230403.14

    Copy | Download

    AMA Style

    Zekarias Bassa. Export Performance of Agricultural, Food Commodities and Economic Growth in Ethiopia: Using Co-Integration Approach. Res Dev. 2023;4(3):90-101. doi: 10.11648/j.rd.20230403.14

    Copy | Download

  • @article{10.11648/j.rd.20230403.14,
      author = {Zekarias Bassa},
      title = {Export Performance of Agricultural, Food Commodities and Economic Growth in Ethiopia: Using Co-Integration Approach},
      journal = {Research & Development},
      volume = {4},
      number = {3},
      pages = {90-101},
      doi = {10.11648/j.rd.20230403.14},
      url = {https://doi.org/10.11648/j.rd.20230403.14},
      eprint = {https://download.sciencepg.com/pdf/10.11648.j.rd.20230403.14},
      abstract = {The agricultural and export performance of the country determine the Economic growth in Ethiopia. However, Agricultural export performance, granger causality with GDP, labor and capital, the short run and long run dynamic relationship among the variables is not well studied, documented and updated. Therefore, the study aimed to examine influence of agriculture, trade, labour and capital to the economic growth. The analytical procedure applied were Engle-Granger for causality, Johansen Approach for co-integration and error-correction model. The results indicated that in the long run Ethiopian economic growth defined as positive function of agricultural exports, imports and capital, while population negatively affect the growth. In the short run, lagged gross domestic product explained positively the economic growth, while the agricultural imports, capital and population size influenced negatively. The result implied that the correction in one period draws back to the other period at speed of 41%. Therefore, diversifications, adopting labor intensive industries and improvement in fixed capital formation were policy directions that can stimulate growth of Ethiopia Economy.},
     year = {2023}
    }
    

    Copy | Download

  • TY  - JOUR
    T1  - Export Performance of Agricultural, Food Commodities and Economic Growth in Ethiopia: Using Co-Integration Approach
    AU  - Zekarias Bassa
    Y1  - 2023/08/17
    PY  - 2023
    N1  - https://doi.org/10.11648/j.rd.20230403.14
    DO  - 10.11648/j.rd.20230403.14
    T2  - Research & Development
    JF  - Research & Development
    JO  - Research & Development
    SP  - 90
    EP  - 101
    PB  - Science Publishing Group
    SN  - 2994-7057
    UR  - https://doi.org/10.11648/j.rd.20230403.14
    AB  - The agricultural and export performance of the country determine the Economic growth in Ethiopia. However, Agricultural export performance, granger causality with GDP, labor and capital, the short run and long run dynamic relationship among the variables is not well studied, documented and updated. Therefore, the study aimed to examine influence of agriculture, trade, labour and capital to the economic growth. The analytical procedure applied were Engle-Granger for causality, Johansen Approach for co-integration and error-correction model. The results indicated that in the long run Ethiopian economic growth defined as positive function of agricultural exports, imports and capital, while population negatively affect the growth. In the short run, lagged gross domestic product explained positively the economic growth, while the agricultural imports, capital and population size influenced negatively. The result implied that the correction in one period draws back to the other period at speed of 41%. Therefore, diversifications, adopting labor intensive industries and improvement in fixed capital formation were policy directions that can stimulate growth of Ethiopia Economy.
    VL  - 4
    IS  - 3
    ER  - 

    Copy | Download

Author Information
  • Southern Agricultural Research Institute, Areka Agricultural Research Centre, Wolaita, Ethiopia

  • Section