Agricultural Export and Economic Growth Nexus: A Case Study of Ethiopia

Abstract

The Ethiopian export sector has depended on few agricultural products like coffee (29.5%), oil seeds (14.9%), pulses (9.5%), Chat (9.3%), and cut flowers (8%). The total export earnings were declined over time. This, the aim of this term paper is to study the trend and impact of agricultural export on economic growth in Ethiopia. The study was analyzed through Engel granger co-integration test and causality test by employed secondary time series data from 1997- 2018. The Engel granger co-integration test result showed that there is no long run relationship between agricultural export and economic growth. The Granger Causality test result revealed that there is no evidence of Granger causal relationship between agricultural export and economic growth implying neither export led growth nor growth driven agricultural export is valid in the context of Ethiopia. Therefore the government should make an effort to bring a structural change from export of primary agricultural goods to manufacturing goods.