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Evaluation of Effect of Exchange Rate Variability on Export of Ethiopia’s Agricultural Product: Case of Oilseeds

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  • Mehare, Abule
  • Edriss, Abdi K.

Abstract

This research was carried out to find out the effect of exchange rate variability on export of oilseeds. It has employed annual time series data (1992-2010) collected from the country’s different institutions, namely: National Bank of Ethiopia (NBE), Central Statistical Agency of Ethiopia (CSA), and Ethiopian Custom Authority (ECA). Tools of descriptive statistics were used to analyze the data and understand the dynamics of the variables included in the analysis. Autoregressive Distributive Lag (ARDL) with Wald test was used to test the hypothesis that ‘there is no short run and long run relationship between export oilseeds and explanatory variables included in the model’. The result revealed that export oilseeds have negative relationship with exchange rate variability. Terms of Trade (TOT) was found to be negative and significant. Gross Domestic Product (GDP) is found to be insignificant; implying contribution of oilseeds to the export basket of the country is decreasing. Moreover, the underlined hypothesis was rejected confirming that there is a long run relationship between export and oilseeds and explanatory variables included. Export diversification and value addition are of possible solutions the country should focus on to improve the ever decreasing terms of trade and extract the gain from policy changes.

Suggested Citation

  • Mehare, Abule & Edriss, Abdi K., 2012. "Evaluation of Effect of Exchange Rate Variability on Export of Ethiopia’s Agricultural Product: Case of Oilseeds," Research Theses 157504, Collaborative Masters Program in Agricultural and Applied Economics.
    • Handle: RePEc:ags:cmpart:157504
    DOI: 10.22004/ag.econ.157504
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    File URL: https://ageconsearch.umn.edu/record/157504/files/Abule%20Meher.pdf
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    References listed on IDEAS

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    1. Andrew Abbott & Adrian Darnell & Lynne Evans, 2001. "The influence of exchange rate variability on UK exports," Applied Economics Letters, Taylor & Francis Journals, vol. 8(1), pages 47-49.
    2. Loening, Josef L. & Durevall, Dick & Birru, Yohannes A., 2009. "Inflation dynamics and food prices in an agricultural economy : the case of Ethiopia," Policy Research Working Paper Series 4969, The World Bank.
    3. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    4. Ms. Piritta Sorsa, 1999. "Algeria: The Real Exchange Rate, Export Diversification, and Trade Protection," IMF Working Papers 1999/049, International Monetary Fund.
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    Cited by:

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    3. Alaba David Alori & Adebayo Augustine Kutu, 2019. "Export Function of Cocoa Production, Exchange Rate Volatility and Prices in Nigeria," Journal of Economics and Behavioral Studies, AMH International, vol. 11(2), pages 1-14.

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