Impact of Agricultural Exports on Economic Growth in Ethiopia: The Case of (Coffee, Oilseed and Chat) Exports

Economic growth is one of the leading objectives of every economy in the world. In developing countries, agriculture is the backbone of economic growth. Ethiopia is one of the developing countries. The source of foreign currency is basically depending on the exports of agricultural crops. The objective of this study was to assess the trend and effects of selected agricultural (coffee, oilseed and chat) exports on economic growth in Ethiopia by using yearly time series data covering from 1991 to 2021. The study used secondary data and employed both descriptive and econometric techniques. In this context, both dependent and explanatory variables were analyzed by using the co-integration, Error correction and Granger causality model. Before the analysis, the stationarity of time series data was tested by using the Augmented Dickey-Fuller (ADF) and Phillips-Perron (PP) tests. The trend of Ethiopia's agricultural (coffee, oilseed and chat) export reveals that increased over time. The findings of the study also showed that Coffee, oilseed and chat exports have positive and significant relationship with economic growth in the long run. While, in the short run, oilseed and chat exports have positive and significant effect on economic growth, coffee export was found to have negative and insignificant effect on economic growth. On the other hand, the causality relationship found that there is a bi-directional relationship between Chat, oilseed export, and economic growth, whereas a unidirectional relationship was found between coffee export and economic growth. Based on the results, it is recommended that policies aimed at increasing the productivity and quality of these cash crops should be applied. Also it is necessary to keep agro-based industries in the agricultural sector so that value-added goods can replace raw agricultural exports. When this is done, it will lead to a higher rate of economic growth in Ethiopia.