Determinants and Potentials of Foreign Trade in Ethiopia: A Gravity Model Analysis

In this study, attempts are made to provide a theoretical justification for using the gravity model to analyze bilateral trade flows. The augmented gravity model was adopted to analyse Ethiopia's trade with its main trading partners using the panel data estimation technique. Estimations of the gravity model for export, import and total trade (sum of exports and imports) are carried on. The estimated results show that Ethiopia's export, import and total trade are positively determined by the size of the economies, per capita GDP differential and openness of the trading countries' economies. Specifically, the major determinants of Ethiopia’s exports are: size of the economies(GDP's of Ethiopia and that of partner), partner countries’ openness of economies, economic similarity and per capita GDP differential of the countries. All these factors affected Ethiopia's export positively except similarity indicator. The exchange rate, on the other hand, has no effect on Ethiopia's export trade. Ethiopia's imports are also determined by GDP's (of Ethiopia and the partner country), per capita income differentials and openness of the countries involved in trade. Transportation cost is found to be a significant factor in influencing Ethiopia's trade negatively. On the other hand, Ethiopia's export and import trade are not found to be influenced to by common border . The country specific effects show that Ethiopia could do better by trading more with Comesa member countries and newly emerging economies of Asia such as Hong Kong, Singapore and Yemen as well as European countries like Turkey and Russia

Determinants and Potentials of Foreign Trade in Ethiopia: A Gravity Model Analysis

In this study, attempts are made to provide a theoretical justification for using the gravity model to analyze bilateral trade flows. The augmented gravity model was adopted to analyse Ethiopia's trade with its main trading partners using the panel data estimation technique. Estimations of the gravity model for export, import and total trade (sum of exports and imports) are carried on. The estimated results show that Ethiopia's export, import and total trade are positively determined by the size of the economies, per capita GDP differential and openness of the trading countries' economies. Specifically, the major determinants of Ethiopia’s exports are: size of the economies(GDP's of Ethiopia and that of partner), partner countries’ openness of economies, economic similarity and per capita GDP differential of the countries. All these factors affected Ethiopia's export positively except similarity indicator. The exchange rate, on the other hand, has no effect on Ethiopia's export trade. Ethiopia's imports are also determined by GDP's (of Ethiopia and the partner country), per capita income differentials and openness of the countries involved in trade. Transportation cost is found to be a significant factor in influencing Ethiopia's trade negatively. On the other hand, Ethiopia's export and import trade are not found to be influenced to by common border . The country specific effects show that Ethiopia could do better by trading more with Comesa member countries and newly emerging economies of Asia such as Hong Kong, Singapore and Yemen as well as European countries like Turkey and Russia

Ethiopia Social Accounting Matrix 2015/16

A Social Accounting Matrix (SAM) is a comprehensive and economy-wide database recording data on all transactions between economic agents in a certain economy during a certain period of time; its interest is twofold. First a SAM is a standard database for most whole economy modellers as it provides comprehensive data for economic modelling (multi-sectorial linear models or more complex CGE models). Second a SAM shows a complete and intuitive snapshot of the economy at hand. This report presents the Social Accounting Matrix of Ethiopia for the year 2015/16, describing its specific structure and the basis for its estimation. In this sense, it is necessary to highlight the special structure of this SAM to reflect the Home Production for Home Consumption (HPHC) issue and a high disaggregation of agricultural and food sectors, both aspects so relevant in developing countries. Finally, a complete on-line application is presented, both for the download of the SAM, and for the visualization of some indicators derived directly from it.JRC.D.4-Economics of Agricultur

Unemployment and Rural-Urban Migration in Ethiopia

Almost 80% of the Ethiopian population is living in rural areas (Central Statistics Agency, 2017). Although the unemployment rate in rural areas is estimated to be around 2% (Ministry of Agriculture and Natural Resources, 2017), majority of rural population is young people with limited access to land and other means of agricultural production and most of them plans to quit agricultural production in near future (Bezu & Holden, 2014) despite rural non-farm employment opportunities are quite limited (Schmidt & Bekele, 2016). The lack of job opportunities in rural areas is among the core reasons of migration of young people to urban areas (Atnafu, Oucho, & Zeitlyn, 2014). According to a recent study by IFPRI, 28% of the young people in the Blue Nile Basin in Amhara and Oromia have permanently migrated to the urban areas between 2010-2014 (Kosec, Ghebru, Holtemeyer, Mueller, & Schmidt, 2017). However, an already high rate of unemployment in the urban areas with 16.5% (Ministry of Agriculture and Natural Resources, 2017) indicates that those who move to the cities for better job opportunities face significant constraints in finding jobs. The aim of this paper is to analyse the impact of the RJOC strategy on the Ethiopian economy and to develop policy recommendations for the prioritization of government investments. To this end we will first present a qualitative analysis of the RJOC strategy based on a series of in-depth interview and focus group discussion with the officials from MoANR and other concerned bodies, a review of best practices from other countries experience and an assessment of existing policies and strategies related to job creation and migration. Then we will employ a country level CGE model to quantify the impacts of RJOC strategy by using a recently developed SAM for 2014

Unemployment and Rural-Urban Migration in Ethiopia

Almost 80% of the Ethiopian population is living in rural areas (Central Statistics Agency, 2017). Although the unemployment rate in rural areas is estimated to be around 2% (Ministry of Agriculture and Natural Resources, 2017), majority of rural population is young people with limited access to land and other means of agricultural production and most of them plans to quit agricultural production in near future (Bezu & Holden, 2014) despite rural non-farm employment opportunities are quite limited (Schmidt & Bekele, 2016). The lack of job opportunities in rural areas is among the core reasons of migration of young people to urban areas (Atnafu, Oucho, & Zeitlyn, 2014). According to a recent study by IFPRI, 28% of the young people in the Blue Nile Basin in Amhara and Oromia have permanently migrated to the urban areas between 2010-2014 (Kosec, Ghebru, Holtemeyer, Mueller, & Schmidt, 2017). However, an already high rate of unemployment in the urban areas with 16.5% (Ministry of Agriculture and Natural Resources, 2017) indicates that those who move to the cities for better job opportunities face significant constraints in finding jobs. The aim of this paper is to analyse the impact of the RJOC strategy on the Ethiopian economy and to develop policy recommendations for the prioritization of government investments. To this end we will first present a qualitative analysis of the RJOC strategy based on a series of in-depth interview and focus group discussion with the officials from MoANR and other concerned bodies, a review of best practices from other countries experience and an assessment of existing policies and strategies related to job creation and migration. Then we will employ a country level CGE model to quantify the impacts of RJOC strategy by using a recently developed SAM for 2014