Export and Economic Growth in Ethiopia

Ethiopia is an agriculture-based economy that has experienced remarkable economic growth nearly for the last one decade. There are various approaches to achieve this target of which one strategy is to promote exports of the country. At this juncture, an important issue immediately comes to the minds of economists and researchers, that is, whether export promotion leads to higher economic growth or economic growth promotes exports. Some studies support the ELG hypothesis, others support the GDE hypothesis and still others support the bidirectional relationship between the two. In Ethiopia, very little academic literature exists that shows the nexus between export and economic growth. Therefore, in this study, we examine the dynamic relationship of two components of exports (agricultural exports and non-agricultural exports) with economic growth by using different time series Econometric Techniques like Johanson Cointegration test and VECM. The analysis should help as a reference to subsequent research works especially to professionals in economics fields, or anyone else who is interested to undertake further study on the issue.