DETERMINES OF THE EXPORT TRADE PERFORMANCE WITH SPECIAL REFERENCE TO ETHIOPIA

This paper identified some of the main determinants of export performance in Ethiopia for the period<br> 2010 -2016. To test empirically the relationship between export performance and its major selected<br> determinants such as terms of trade, trade openness, gross domestic product, real effective exchange<br> rate, domestic credit and capital expenditure over a period. The data is collected from NBE (2011), EEA<br> Statistical data base CD-ROM (2012), WB and MoFED. The estimated results specified that exchange rate<br> and trade liberalization significantly affect the export value of Ethiopia. The estimation technique used is<br> error correction model and the simultaneous equation framework with Two Stage Least Square approaches<br> (2SLS).<br> The results from the econometric analysis revealed that all the above listed explanatory variables<br> significantly affected export performance in the long run except capital expenditure and GDP of trading<br> partners’ and . In the short run, terms of trade became insignificant and negative in sign which was<br> unexpected. Capital expenditure was also in-significant like in the case of long run. However, except<br> these two variables other variables were found to significantly affect the export performance of the<br> country. On the other hand, out of the variables significantly affected export both in the long run and<br> short run; terms of trade, trade openness, and real gross domestic product affected export positively<br> as expected. Especially when we look at the magnitude by which trade openness affected the dependent<br> variable both in the long run and in the short run positively and significantly, However, relative price<br> (the ratio of price of exports to domestic prices), is negatively related to the supply of export suggesting<br> that some commodities are diverted to the domestic market as their prices increase. It can be regarded as<br> one of the key finding in this study.