Export Performance of Linseed and Its Determinant in Ethiopia

Abstract

This empirical study investigates the determinants of linseed export performance of Ethiopia over a period 1983-2017. The study identified four factors influencing export performance in terms of export earned like GDP, gross capital formation as a ratio of GDP, openness to trade and world price. As a first step unit root analysis was conducted to test the stationarity of the variables. The variables were non stationary at levels but stationary at their first difference. Second co integration test were employed to check the existence of long run relationship between non stationary variables and found that on co integrating relationship exists in the long run. As a last step vector error correction model was employed to describe the dynamic interrelationship between variables both in the short and long run. The results derived from this study suggest that all variables are significantly influencing on the export in the long run. In the long run, GDP and openness to trade are found to have a positive impact whereas; world price and capital formation had a negative impact.  In the short run capital formation and world price had significantly influencing export performance whereas: GDP and openness to trade was insignificant

Keywords: export, vector error correction model

DOI: 10.7176/DCS/9-12-03

Publication date: December 31^st 2019