Add Thesis

Long-run effect of Export volatility on GDP

Case of Ethiopia

Written by G. Gebremedhin

Paper category

Master Thesis






Thesis: Review of Ethiopia's foreign trade policy and its impact on export performance 2.2 Foreign trade policy environment For a century, agriculture has played a central role in the country's economic growth. The following static figures bear witness to the above premise, accounting for more than 45% of GDP, 80% of exports and 80% of employment. contribute. Ethiopia's foreign trade policy generally has three overall goals; (1) "Develop and ensure a broad international market for its own agricultural products, especially the country's agricultural products." 2. "Generating sufficient foreign exchange, which is essential for importing capital goods, intermediate inputs, and other goods and services necessary for economic growth and development" and (3) "Improving the efficiency and international competitiveness of domestic producers through participation On the international market” (ETPS, 2007). 2.2.1 The imperial government’s international trade plan is divided into three parts. The first development plan is from 1960 to 1964, and the second is from 1965 to 1969. The last one was from 1970 to 1974. In the first five plans (from 1960 to 1964), the imperial government paid more attention to shrinking infrastructure, which was originally a positive impact on the country’s export growth. Due to the previous regime’s infrastructure Too bad, the imperial government paid more attention to infrastructure construction. The second five-year plan (1963-67) was extended from the first five-year plan. The “Twelfth Five-Year Plan” put forward major goals, one of which is The export volume of agricultural products will increase industrial products. This structural change will affect the increase in the country’s export income and will also increase the export volume. In addition to the main goal, the imperial government also wants to increase the share of exports of manufacturing products. In order to achieve this Goal, the imperial government has adopted incentives such as profit tax, export license simplification, and tax holy days, and has developed chambers of commerce. The dangerous government continues to work in the second five-year plan and further reduces the previous five-year plan (1969- 74) Percentage of agricultural product export share. The decisive plan showed a successful result, that is, the expected result has gone from 86% to 75% in 1973. 2.2.2 After the collapse of the Ethiopian military government, the military government came to power in 1974. Like the government in distress, the military government has been introducing different strategic policies, which will have a positive impact on improving Ethiopia’s export performance. The ten-year plan of the military government was from 1974 to 1994. The main goal of the military government was to transform the national economic system to "export-oriented and diversify the existing export structure to manufactured products." In order to achieve the goals of the 10-year plan, the military government uses tax incentives, tariff reductions, and exchange rates as tools for the military government to promote exports. In addition, the military government also allows different institutions, including chambers of commerce, to participate in order to encourage the export of manufactured goods and promote export trade (Military Government Trade Strategy, 1978) 2.2.3 Ethiopia’s EPDRF system was ordered by the country’s economy to rule 17 year. system. However, the EPDRF transitional government took office to transform the national economic system from a command economy to a free market principle by implementing a policy of difference. The first task of the EPDRF transitional government is to transform these systems from sector to privatization. The EPDRF government has formulated the main policy measures to promote the export sector. The Ethiopian currency has depreciated from US$2.07 to US$5 in order to promote exports. Change the national economic system from the state-owned economy to the market economy Change administrative procedures, such as tariff service facilities, tax sacred days. For example, the highest import tariff rate has been reduced from 230% to 40%. The export promotion agency was established in 1998 to promote national exports and export facilitation. Simplified and transparent import and export license system to reduce many stages. 2.4 Country’s main products 2.4.1 Coffee Even if the country’s coffee exports are compared with the world’s leading coffee countries such as Colombia, Brazil and Vietnam, this proportion is low. The country's annual production capacity is approximately 300,000 tons. The coffee production area from the country’s land is approximately 400,000 hectares. However, of the estimated 12.5 million hectares of highly suitable land, less than 4% is covered by coffee production. (EIG, 2007) The quality and quantity of coffee production have improved significantly from time to time. For example, in 2006/07, the highest reached 180,000 tons. Read Less