Where are the Dynamics of Export Diversification in Ethiopia?
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Date
2021-05-06
Authors
Kebede, Birhan Eshetu
Journal Title
Journal ISSN
Volume Title
Publisher
AERC
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 product-destination descriptive matrix
to analyze export diversification and identify the relevant 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.
Description
Keywords
Export, , Diversification, , Ethiopia, , Product, , Destination.