| Abstract: | The effect of export diversification on economic growth has been a debatable issue in the
empirical literature. This paper, therefore, examined the contribution of export diversification on
economic growth in Ethiopia using time series data from 1970/71—2013/14 based on purposive
samples. National Bank of Ethiopia (NBE), Ministry of Finance and Economic Development
(MOFED), Ministry of Education (MoE) Ethiopia, National Metrology Agency of Ethiopia
(NMAE), Central Statistics Authority (CSA) of Ethiopia and United Nations Conference on
Trade and Development (UNCTAD) were the data sources. The research used both descriptive
and causal type data analyses techniques. In the descriptive parts the trend analysis of export
diversification and real GDP were separately and jointly analyzed. Looking at the result from
descriptive analysis in Ethiopia, the country has recently shown numerical increments. Whereas,
in the econometric analysis multiple regression and basic growth model were used. The
estimation results obtained from the multiple regression test has revealed that export
diversification positively affect Real GDP growth in Ethiopia. The major variables identified in
the study were export diversification, rainfall, investment, financial development, trade openness
of the country, human capital, and labor force growth. Necessary estimations were done to the
effect of each variable on economic growth of Ethiopia. Therefore, export diversification,
rainfall and investment were found to be significant. It has been found out that the country made
an effort to improve export diversification, but it is still below the mid-level of diversification
(50%). Likewise, positive link was found to exist between export diversification and economic
growth in Ethiopia in which 0.14% effect on the economic growth come from export
diversification at its enfant stage. Besides, the country should look forward to identifying new
potential regional and international export markets, need to strengthen the existing few
industries to diversify the exportable product and pave the way for the establishment of new
industries. What is more, emphasis should be given (by the stockholders) to focus on value
addition on exportable items. |
