Abstract:
This paper analysed Ethiopian International trade performance and net-export
trends for the period 2001-2021. Secondary data was collected from, World Bank
Reports, National Bank of Ethiopian Annual Report, Ethiopian Custom Commission
and Ethiopian Trade Commission up on annual base reports. In order to know the
long run and short run determinants, simple linear regression model was employed.
The empirical finding on Ethiopian net-export determination model confirms that,
commercial banks and other lending, residual merchandise imports by the reporting
economy, official exchange rate, and Manufacturing value added annual growth are
significant determinants that negatively affects Ethiopian performance in
international trade. The regression result also indicated that neither growth nor
inflation rate are important predictors of Ethiopia's performance in international
commerce.Finally, Ethiopia has a negative net export value or trade deficit, which
may let her, performs lesser in international trade due to the above listed
determinants. Finally researcher has forward some recommendations drawn from
the conclusions. Government should reduce over-dependence on importing
Manufacturing value added goods and encourage domestic venders as import
substitutions instead. Government should put in place policies that promote
industrialization and enhance domestic production to enlarge export level. The
result further shows that exchange rate depreciation leads to reduction in
competitiveness of Ethiopian trade balance. There is, therefore, the need for robust
and consistent exchange rate policy that would ensure that the exchange rate is not
overvalue
