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Special Graduate Schools
Graduate School of International Studies
Department of International Trade
International Trade
3. Theses(Master)
MAJOR SOURCES OF PERSISTENT TRADE DEFICIT IN ETHIOPIA
- Author(s)
- GUGSA TEMESGEN MULUGETA
- Advisor
- Young, Joon Park
- Department
- 국제대학원 국제통상학과
- Publisher
- Graduate School of International Studies Ajou University
- Publication Year
- 2016-02
- Language
- eng
- Keyword
- Trade deficit
- Alternative Abstract
- Ethiopia has been experiencing persistent negative trade balance in its economy for a long period. To get the overview of this title, different previous studies were reviewed under literature and the results were found to be mixed in different countries. So, this study was designed to examine major sources of persistent trade deficit in Ethiopian economy. In the analysis, trade balance (TB) which is export value minus import value was chosen as dependent variable and domestic income (GDPD), real exchange rate (ER), an average income of top trading partners (GDPT), money supply (M2) and foreign direct investment (FDI) were chosen as explanatory variables. Data of each variable collected annually over the period 1982 to 2012. To avoid the non-stationarity or trending behavior of variables over time, unit root test was conducted using ADF tool and all variables found to be stationary at their first difference. Ordinary least square (OLS) method was used to estimate the relationship between trade balances and its determinants and analysis were done by using STATA 13 software. The general short run regression results showed that income of domestic residents, trading partner's income and foreign direct investment significant in determining trade balance at 5 percent level of significance. Real exchange rate found to be insignificant while money supply growth significant at 10% level of significance. Finally, income of domestic residents, foreign direct investment (in the short-run) and money supply in the economy were found to be major sources of persistent negative trade balance of Ethiopia.
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