Advanced Search
MyIDEAS: Login to save this paper or follow this series

Biofuels, Economic Growth, and the External Sector in Ethiopia: A Computable General Equilibrium Analysis

Contents:

Author Info

  • Ferede, Tadele
  • Gebreegziabher, Zenebe
  • Mekonnen, Alemu
  • Guta, Fantu
  • Levin, Jörgen
  • Köhlin, Gunnar

Abstract

In this study, we assess the economy-wide effects of biofuel investment in Ethiopia, with a focus on the external sector. The Government of Ethiopia has been revising its energy policy to switch from imported fossil oil to domestically produced biofuels, partly in response to climate change and partly in response to rising world oil prices, which leave oil-importing countries such as Ethiopia vulnerable to external oil price shocks. In Ethiopia, the value of oil imports relative to export earnings has increased over time, which has negatively impacted its balance of payments. Specifically, this paper assesses the implications of biofuels investment for growth and the external sector in Ethiopia using a dynamic recursive computable general equilibrium (CGE) model. The study is based on primary data collected from biofuel firms in Ethiopia and assumes that the amount of land is fixed in a given period. The results indicate that the macroeconomic and sectoral effects of biofuel investment in the context of Ethiopia are mixed. Biofuel expansion can help to improve economic growth if such expansion generates spillover effects, with jatropha and castor bean found to have the strongest positive impact on the economy. Without spillovers, the effect of biofuel investment on economic growth is negligible, indicating the importance of technology transfers. The impact on the external sector, especially on exports and imports, is negative, as biofuels expansion affects both the real exchange rate and production of export commodities. This negative effect might be mitigated by policies encouraging biofuels investment to move in a direction that does not compete with the use of land for traditional export crops.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.rff.org/RFF/documents/EfD-DP-13-08.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Resources For the Future in its series Discussion Papers with number dp-13-08-efd.

as in new window
Length:
Date of creation: 19 Jul 2013
Date of revision:
Handle: RePEc:rff:dpaper:dp-13-08-efd

Contact details of provider:
Web page: http://www.rff.org
More information through EDIRC

Related research

Keywords: biofuels; CGE model; economic growth; external sector; Ethiopia;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Karel Janda & Ladislav Kristoufek & David Zilberman, 2011. "Modeling the Environmental and Socio-Economic Impacts of Biofuels," Working Papers IES 2011/33, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Oct 2011.
  2. Negash, Martha & Swinnen, Johan F.M., 2013. "Biofuels and food security: Micro-evidence from Ethiopia," Energy Policy, Elsevier, vol. 61(C), pages 963-976.
  3. Huang, Jikun & Yang, Jun & Msangi, Siwa & Rozelle, Scott & Weersink, Alfons, 2012. "Biofuels and the poor: Global impact pathways of biofuels on agricultural markets," Food Policy, Elsevier, vol. 37(4), pages 439-451.
  4. Negash, Martha, 2012. "Biofuels and Food Security: Micro-evidence from Ethiopia," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126793, International Association of Agricultural Economists.
  5. Sourie, Jean-Claude & Treguer, David & Rozakis, Stelios, 2006. "Economic impact of biofuel chains in France," 2006 Annual meeting, July 23-26, Long Beach, CA 21184, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  6. Birur, Dileep & Hertel, Thomas & Tyner, Wally, 2008. "Impact of Biofuel Production on World Agricultural Markets: A Computable General Equilibrium Analysis," GTAP Working Papers 2413, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
  7. Arndt, Channing & Pauw, Karl & Thurlow, James, 2012. "Biofuels and economic development: A computable general equilibrium analysis for Tanzania," Energy Economics, Elsevier, vol. 34(6), pages 1922-1930.
  8. Nin Pratt, Alejandro & Yu, Bingxin, 2009. "An Updated Look at the Recovery of Agricultural Productivity in Sub-Saharan Africa," 2009 Conference, August 16-22, 2009, Beijing, China 51731, International Association of Agricultural Economists.
  9. Bouët, Antoine & Dimaranan, Betina V. & Valin, Hugo, 2010. "Modeling the global trade and environmental impacts of biofuel policies," IFPRI discussion papers 1018, International Food Policy Research Institute (IFPRI).
  10. Arndt, Channing & Msangi, Siwa & Thurlow, James, 2010. "Are Biofuels Good for African Development? An Analytical Framework with Evidence from Mozambique and Tanzania," Working Paper Series wp2010-110, World Institute for Development Economic Research (UNU-WIDER).
  11. Arndt, Channing & Pauw, Karl & Thurlow, James, 2010. "Biofuels and economic development in Tanzania," IFPRI discussion papers 966, International Food Policy Research Institute (IFPRI).
  12. Kevin McNew & Duane Griffith, 2005. "Measuring the Impact of Ethanol Plants on Local Grain Prices," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 27(2), pages 164-180.
  13. Yao, Shujie & Liu, Aying, 2000. "Policy Analysis in a General Equilibrium Framework," Journal of Policy Modeling, Elsevier, vol. 22(5), pages 589-610, September.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:rff:dpaper:dp-13-08-efd. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Webmaster).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.