Where are the Dynamics of Export Diversification in Ethiopia?
Date
2020-07-30
Authors
Kebede, Birhan Eshetu
Journal Title
Journal ISSN
Volume Title
Publisher
African Economic Research consortium
Abstract
With the export promotion strategy, Ethiopia has tried to increase export earnings
by exporting more in terms of volume and number of commodities. It has also
formulated different strategies and undertaken various policy changes. Among
such changes is the commitment to trade integration as revealed in existing trade
negotiations. The export basket is dominated by coffee, but its share is shrinking
because there are a few other new export items entering the exports basket, such
as cut flowers, textile products and some processed goods. While Gravity Model
is widely used to identify the determinants of trade, it is wise to employ productdestination descriptive matrix to analyze export diversification and identify the
elevant factors that practically influence Ethiopia’s export performance. Based on
the analysis for Ethiopia, the top 20 export commodities are contributing more than
80% of export earnings, but the performance of the new export items such as textile
and textile articles is promising. Among the fastest growing exports, most of them are
value added products such as vehicle parts, and the respective export earnings have
grown by multiple times in 2013 compared to the value in 2004. At HS 6-digit level,
among 316 New Products to Old Destinations (NPOD), 84 are from textile and textile
articles and, though the values per each export are low, there are also 74 new exports in
vehicles, aircraft, vessels and associated transport equipment. The major destinations
of these dynamic products are the EU, North America, China, Middle East, Africa, and
India. Thus, the major factors that play a pivotal role in the export performance and
diversification in Ethiopia are institutional and structural changes, trade facilitation and
export priority, infrastructure improvements, foreign firm participation, trade promotion
and preferential market access, stretched objectives and declining bilateral trade costs.