| Abstract: | Many scholars have tried to point out how to better country to the development road. In our
country also scholar policy makers and many stake holders suggest a way to economic
development. One of the many approaches is through export oriented approach. Gold become
one of emerging export item in Ethiopia and become of a focus for government since Great
transformation plan one. It can be seen that the attention there is no enough study about the
nexus between economic growth and Gold export in the country, even in Africa.The economic
development the major objective of this study was to examine the impact of gold exports on
economic growth in Ethiopia. The study employed an extended generalized Cobb–Douglas
production function model using data from the National Bank of Ethiopia and World Bank data,
a base from 1992 to 2021. All the variables were non stationary at level and integrated of order I
(2), and then co-integration test was conducted to ensure the existence of long-run relationship
using Johansen’s approach. Consequently, all the variables confirmed co-integration, and the
conventional VECM was estimated to extract both short-run and long-run relationships, Granger
causality test was conducted to diagnose the direction of causation thefinding of the study
revealed that gold exports have insignificant short-run impact on economic growth, but
significant positive impact in long run. The result from causality exerted bidirectional
relationship holds in Ethiopia’s gold exports, likewise the result from IRF revealed gold exports
has a positive impact on long-run, economic growth. Besides, labor force, capital formation, and
real effective exchange rates included in the model were found positive and significant impact in
long run. Based on the findings, it is recommended that a long-run policy towards exports in
general and gold export is believed to provide significant impact on economic growth thus,
increasing efficiency of the sector and exporting gold would enable Ethiopia to sustain domestic
economic growth. Besides, values had better be added to gold before exporting and when this is
done, it will lead higher economic growth in long run. |
