Determinants of Ethiopia Export Performances: Evidence from an Auto Regressive Distributive Lag Model

Export was to drive productive capacity of domestic businesses, employment generation, better source of resource allocation and distribution. As a result, export to be an engine for economic growth and development. The objective of this study was to identify determinants of export in Ethiopia for the period 1996-2023 by applying auto regressive distributive lag model with bound testing approach of co-integration and error correction model. The Error Correction Term is negative (-0.889642) and is significant at 1% confidence level which indicates that any deviation from the long run equilibrium between variables is corrected about 88.96% each year. As evidenced from the estimation result of Auto Regressive Distributive Lag Model with bound testing approach of co-integration and error correction model, foreign direct investment, inflation rate, institutional quality index, taxes on international trade and trade openness of Ethiopia positively and statistically significantly affect the Ethiopian exports performance both in short-run and long-run. However, first lag of real exchange rate positively and statistically significantly affect Ethiopian exports performance only short run. Hence, government should encourage infrastructures attract foreign investors to directing produce exportable goods, reducing export duties to improve competitiveness on international trade improving the institutional quality through respect rule of law, government effectiveness, legal voice and accountability, regulatory quality and lowering corruption boost Ethiopian exports performance.