CONTRIBUTION OF INFRASTRUCTURE ON ECONOMIC GROWTH OF ETHIOPIA

Abstract

Infrastructure serves as the backbone of a functioning society by providing a well-suited environment for upgrading the economic status of a country. From the perspective of Ethiopia the most important question is whether infrastructure contributed on economic growth of Ethiopia. The objectives of the study were to examine the contribution of infrastructure development on the economic growth of Ethiopia. The study follows an empirical research using secondary data from1981-2010E.C. The research proceeds to test empirically whether Electric production , Air Transport, Telephone line $ Road has been contribution on Ethiopian economy. the paper used dicky-fuller and Johannessen tests to check the stationarity of the variables and employs Cobb Douglas production function model,. Based on the finding of the study, all variables were unit root I(0) after first order they became stationary, All the variables are also confirmed cointegration based on Johansen tests. based on vector error correction model estimation result, all the independent variables whether Electric production, Air Transport, , Telephone line & Road has a positive and significant impact on economic growth in the long run. and becomes insignificant in the short run. Based on the finding the study highlights From the policy perspective, greater emphasis is needed on infrastructure development to sustain the high economic growth which Ethiopian economy has been experiencing for the last few years.