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Why export promotion efforts failed to deliver? Assessment of the export incentives and their implementation in Ethiopia

Author

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  • Mulu Gebreyesus

    () (Ethiopian Development Research Institute)

  • Ashagrie Demile

    () (Ethiopian Development Research Institute)

Abstract

This paper examines the effectiveness of the existing export incentives in reducing the anti-export bias and encouraging exports; both in terms of their sufficiency and implementation related obstacles. We used a qualitative method and triangulated different data sources and interviews with different actors in the sector. The study reveals that the incentives provided for exporters are insufficient to motivate the private sector engage in exports. Firms that produce for domestic market have almost comparable incentives through investment promotion. The additional incentives provided for exporters are, thus, mediocre in comparison not only to the challenges associated with exporting and anti-export bias created by the existing policies but also to the investment incentives that are available for all investors including firms producing for domestic market. More importantly, the study found that the effectiveness of the export incentives is substantially constrained by the lack of efficient export bureaucracy and coordination problem. This has made difficult to ensure exporters have access even to the limited level of export incentives and encouraging diversion and rent seeking by the private sector. All these suggest that overcoming the incentive administration hurdles would reward the government’s effort in promoting export in addition to making the export inventive attractive relative to the investment incentive.

Suggested Citation

  • Mulu Gebreyesus & Ashagrie Demile, 2017. "Why export promotion efforts failed to deliver? Assessment of the export incentives and their implementation in Ethiopia," Working Papers 017, Ethiopian Development Research Institute.
  • Handle: RePEc:etd:wpaper:017
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    References listed on IDEAS

    as
    1. Nadeem Ul Haque & M. Ali Kemal, 2007. "Impact of Export Subsidies on Pakistan’s Exports," PIDE-Working Papers 2007:26, Pakistan Institute of Development Economics.
    2. Wontack Hong, 1980. "Export Promotion and Employment Growth in South Korea," NBER Chapters,in: Trade and Employment in Developing Countries, Volume 1: Individual Studies, pages 341-392 National Bureau of Economic Research, Inc.
    3. Elena Ianchovichina, 2007. "Are duty drawbacks on exports worth the hassle?," Canadian Journal of Economics, Canadian Economics Association, vol. 40(3), pages 881-913, August.
    4. Panagariya, Arvind, 2000. "Evaluating the case for export subsidies," Policy Research Working Paper Series 2276, The World Bank.
    5. Islam, Nurul, 1969. "Export Incentive and Effective Subsidy in Pakistan: An Evaluation," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 31(3), pages 169-188, August.
    6. Nadeem Ul Haque, 2007. "Impact of Export Subsidies on Pakistan’s Exports," Trade Working Papers 22191, East Asian Bureau of Economic Research.
    7. Tyler, William G., 1981. "Growth and export expansion in developing countries : Some empirical evidence," Journal of Development Economics, Elsevier, vol. 9(1), pages 121-130, August.
    8. Bhagwati, Jagdish N, 1988. "Export-Promoting Trade Strategy: Issues and Evidence," World Bank Research Observer, World Bank Group, vol. 3(1), pages 27-57, January.
    9. Lederman, Daniel & Olarreaga, Marcelo & Payton, Lucy, 2010. "Export promotion agencies: Do they work?," Journal of Development Economics, Elsevier, vol. 91(2), pages 257-265, March.
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    Keywords

    Ethiopia; Manufacturing sector; Effectiveness of Export incentives;

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