An Economic Inquiry into Ethiopian Exports: Pattern, Characteristics, Dynamics and Survival

Berihu Assefa () and Kiflu Gedefe ()
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Berihu Assefa: Ethiopian Development Research Institute
Kiflu Gedefe: Ethiopian Development Research Institute
Authors registered in the RePEc Author Service: Berihu Assefa Gebrehiwot

No 14, Working Papers from Policy Studies Institute

Abstract: Using both aggregate and firm-level Customs data, this paper examines Ethiopia’s export performance and dynamics over the period 1995/1996 – 2014/2015 from various dimensions. Specifically, we attempt to address the following issues: (i) How concentrated/diversified are Ethiopia’s exports in terms of exporters, products, and markets? Or, over the past decade or so, has Ethiopia added economically significant numbers of new products and markets to its export portfolio. (ii) To what extent do Ethiopian exporters survive beyond their first year of entry to the export market? (iii) And finally we decompose export growth/contraction into intensive and extensive margins to see what drives export change in Ethiopia. Several key patterns emerge from our analysis. First, we observe that Ethiopia’s export base remains quite limited, both in absolute terms and compared to countries with similar level of development. This is reflected in Ethiopia’s small number of exporters and export products as well as its low ratio of merchandise exports to GDP relative to its size and compared to its peers. The country not only has very few exporters, but the average exporter size is also very small. Second, the export diversification analysis reveals that despite a 15.5 percent growth in merchandize exports over the past decade, most of this growth is driven by expansion of exports of existing products in existing markets (growth at the intensive margin) rather than by diversification into new products and into new geographic markets (growth at the extensive margin). Third, the firm-level data analysis shows that the Ethiopian export market shows a high degree of exporter and export product churning but exporter exit and product death are also high. As a result the annual average net exporter entry is found to be about 2.5 percent. Likewise, survival beyond the first export year continues to be a challenge to new entrants. And finally, entry costs and relative size of entrants are found to be key determinants of entry, exit and survival rates.

Keywords: Ethiopia; export diversification; export dynamics; export survival (search for similar items in EconPapers)
Pages: 49 pages
Date: 2016-05
New Economics Papers: this item is included in nep-int
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