Determinants of Ethiopian Coffee Exports to Its Major Trade Partners: A Dynamic Gravity Model Approach
| Author | Degye Goshu,Fassil Eshetu |
| Published date | 01 May 2021 |
| Date | 01 May 2021 |
| DOI | 10.1177/0015732520976301 |
| Subject Matter | Articles |
Determinants of
Ethiopian Coffee
Exports to Its Major
Trade Partners:
A Dynamic Gravity
Model Approach
Fassil Eshetu1 and Degye Goshu2
Abstract
The aim of this article is to examine export determinants of Ethiopian cof-
fee to 31 trade partner countries using a dynamic gravity model and system
generalised moment method of estimation (GMM) for the period 1998–2016.
Descriptive results showed that Ethiopia was exporting only 39% of its total cof-
fee production, and 53.5% and 34.13% of Ethiopian coffee exports were directed
to European and Asian countries, respectively, over the period 1998–2016.
Regression results revealed that trade openness, population size of Ethiopia, for-
eign direct investment and institutional quality index of Ethiopia are positively
and significantly affecting volume of Ethiopian coffee export. But population of
partner countries, weighted distance, lagged export volume and real exchange
rate are negatively and significantly influencing export volume of Ethiopian cof-
fee. Hence, Ethiopia needs to diversify its export destinations and export items a
way from primary agricultural exports to secondary industrial exports in order
to secure dependable source of foreign currency. Also, controlling corruption,
increasing government effectiveness, ensuring political stability promotion of for-
eign direct investment and encouraging trade liberalisation would help to boost
the volume of Ethiopian coffee export.
JEL Codes: F12, F13, F14
Article
1 Assistant Professor and PhD Scholar, School of Agricultural Economics and Agribusiness, Haramaya
University, Haramaya, Ethiopia.
2 Associate Professor of Economics, Kotebe Metropolitan University, Addis Ababa, Ethiopia.
Corresponding author:
Fassil Eshetu, Haramaya University, School of Agricultural Economics and Agribusiness, Haramaya,
Ethiopia, P.O. Box 21, Haramaya, Ethiopia.
E-mail: bekatfech@gmail.com
Foreign Trade Review
56(2) 185–196, 2021
© 2021 Indian Institute of
Foreign Trade
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DOI: 10.1177/0015732520976301
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