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Exploring the Relationship between Trade Liberalization and Ethiopian Economic Growth

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  • Bekele, Yetsedaw Emagne

Abstract

Theoretical and empirical economic literature has shown the economic growth of countries is related to both liberalization and international trade integration. The main purpose of this study is to apply this knowledge to the Ethiopian case and estimate the impact of trade liberalization on Ethiopian economic growth. The study has employed an Error Correction Model (ECM) for the time series data ranging from 1980 to 2016 to examine the economic effect of trade liberalization on the Ethiopian economy. The empirical results show that there are both short run and long run relationships between liberalization and economic growth. More specifically, trade openness has had a positive and significant impact on economic growth of Ethiopia. Therefore, the government of Ethiopian should have to design a more opened trade policies so as to reap the benefits associated with integrating ones economy with the world economy.

Suggested Citation

  • Bekele, Yetsedaw Emagne, 2017. "Exploring the Relationship between Trade Liberalization and Ethiopian Economic Growth," MPRA Paper 83584, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:83584
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    References listed on IDEAS

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    3. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    4. Parikh, Ashok & Stirbu, Corneliu, 2004. "Relationship between Trade Liberalisation, Economic Growth and Trade Balance: An Econometric Investigation," HWWA Discussion Papers 282, Hamburg Institute of International Economics (HWWA).
    5. Dani Rodrik, 1998. "Has Globalization Gone Too Far?," Challenge, Taylor & Francis Journals, vol. 41(2), pages 81-94, March.
    6. S.M. Shafaeddin, 2005. "Trade Liberalization And Economic Reform In Developing Countries: Structural Change Or De-Industrialization?," UNCTAD Discussion Papers 179, United Nations Conference on Trade and Development.
    7. Edwards, Sebastian, 1992. "Trade orientation, distortions and growth in developing countries," Journal of Development Economics, Elsevier, vol. 39(1), pages 31-57, July.
    8. Greenaway, David & Morgan, Wyn & Wright, Peter, 1997. "Trade liberalization and growth in developing countries: Some new evidence," World Development, Elsevier, vol. 25(11), pages 1885-1892, November.
    9. Greenaway, David & Morgan, Wyn & Wright, Peter, 2002. "Trade liberalisation and growth in developing countries," Journal of Development Economics, Elsevier, vol. 67(1), pages 229-244, February.
    10. Anne O. Krueger & Mr. Andrew Berg, 2003. "Trade, Growth, and Poverty: A Selective Survey," IMF Working Papers 2003/030, International Monetary Fund.
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    Cited by:

    1. Innocent .U. Duru & Bartholomew .O.N. Okafor & Friday .O. Adikwu & Franklin .C. Njoku, 2020. "Trade Liberalization and Economic Growth: An Assessment of Nigerian Experience," Asian Development Policy Review, Asian Economic and Social Society, vol. 8(3), pages 194-213, September.

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    More about this item

    Keywords

    Cointegration; Economic Growth; ECM; Trade Liberalization;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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