The Contribution of Export Diversification for Economic Growth in Ethiopia

Abstract

This paper has investigated the long-run performance (effect) of export and its volatility on GDP growth in Ethiopia. To address this research topic the paper has used extended Cobb-Douglas production growth model running Ordinary Least Square econometric approach. The study have been used five variable inputs i. e, export of good and service, Gross capital formation as proxy variable of stock of capital, export volatility index, Hirschman concentration index and labor and Real GDP as a dependent variable. The coverage of the time series data was from the year 1980 to 2012. According to the empirical finding of the paper, the long run effect of export seems to have positively statistical effect on output growth in case of Ethiopia. The study suggests that the country should have to diversify its export commodities where it has comparative advantage. In addition, the country should also increase its trading partner countries.

Keywords: Export diversification, Economic growth, Volatility, Overall growth.