THE CONTRUBUTIONS OF MAJOR MINERALS EXPORT TO THE ETHIOPIAN ECONOMY

Abstract

The thesis paper investigates the contribution of exporting major mineral resources in the Ethiopian economy. The research approach employed for the study is qualitative and quantitative research. Empirically examining the contribution of macroeconomic variables to economic growth would help the country to formulate conducive policies to foster economic growth to this regard, this study investigated the contribution of major minerals export earnings on economic growth of Ethiopia for the period 1994/95-2013/14 by empirically testing the long run and short run relationship and causality between exporting major mineral resources and economic growth via including another macroeconomic variable i.e. import using popular time series econometric techniques of cointegration,Vector error correction estimation and Granger causality test. The results from unit root test and cointegration shows the existence of long run relations among the variables and volatility of the variables which indicate from year to years the export of minerals is not be constant it is trend is fluctuate but they have great contribution for the country GDP.Furthermore, the Granger causality test conducted indicate that in the short run there is no causality among variables but in the long run there is bidirectional causality among the five variables including: GDP,Export of Opal, Export of Tantalum, Export of Gold and Exchange Rate. The key finding in this study is that export of major minerals positively and significantly affected economic growth and growth also stimulates export of major minerals in the long run and export of minerals fluctuates from year to year. This provided support for the adoption of Export Diversification to Minerals and also from Exporting minerals the income generated from Opal minerals which have recent history is being become increase at increasing rate as a result government give grate incentive for this minerals and effort should be directed towards policies that will expand the volume of a country‘s major exports Minerals at the same time encourage Artisiane miners to use technology and support exporter of minerals for exporting minerals.