The Impact of Agricultural Export Performance on Economic Growth of Ethiopia

Abstract

The objective of this study was to examine the impact of agricultural export performance on economic growth of Ethiopia. The study employed both descriptive analysis and econometric technique. In particular, the study sets out to assess the trend of agricultural export and economic growth in Ethiopia using yearly time series data covering from 1989/90 to 2018/19 years. The dependent variable is the real Gross Domestic Product (GDP) of the country. Explanatory variables namely agricultural export values (AEX), gross capital formation (GCF), gross labour force (GLF) real exchange rate (RER), and imports (IM) were regressed using the Autoregressive Distributed Lag (ARDL) model. Granger causality method was used to test the direction of causality between agricultural export and economic growth. The long run results obtained indicated that agricultural export has positive and significant effect on economic growth of Ethiopia. In the short run, agricultural export have no significant effect on economic growth. The granger causality shows uni-directional relationship between agricultural export and economic growth. The Recommendation from the results of the study was that to improve the productivity and quality of agricultural export commodities, the government should adopt modern machines and technology, provision of adequate inputs, availability of credit, improved marketing mechanism as well as maintain Agro based industries to export value added goods rather than raw material to increase foreign exchange earning of country.