DETERMINANTS OF EXPORT PERFORMANCE IN THE ETHIOPIAN LEATHER INDUSTRY: A SUBSECTOR ANALYSIS

Abstract

This study aimed at identifying the major determinants of export performance which have been a matter of argument in Ethiopia for a long period of time. The paper empirically examined the export performance and its major determinant factors in the Ethiopian context using panel data for the period 2002-2011(2008/9-2018/19) obtained from LIDI, NBE, MoFEC, and CSA. The analysis employed Random Effect Model. The explanatory variables are jointly significant at 95% level of significance. From the data analysis, we can clearly realize that number of leather exporting firms and number of sector specific employees have significant positive relationship with leather export performance of Ethiopia; on the other hand, real effective exchange rate, quality standard certification and total national export value have insignificant negative relationship with leather export performance of Ethiopia. Therefore; to improve the export performance of the Ethiopian leather sector; the government and other stakeholders should work to increase skilled human power in the sector so that they manufacture globally competitive leather and leather products. Secondly; the export performance of the sector will increase if number of export firms increases. The data analysis has shown positive and significant relationship between number of firms and export value despite the sectorial investors are blamed of selling their products locally. Therefore; government should work to attract local private investors and FDI toward the sector by reassuring all facilities and preconditions. Besides, the government should invest on skill development continuously through benchmarking programs with different middle income countries, expanding different long-term and short-term training and educations supported by technical facilities in the area of leather and leather products.