Abstract:
The major objective of this research is to investigate factors that determine the Ethiopian major commodity export performance in the period 1991/92-2022/23. The study focuses on seven major commodity exports: coffee, oil seeds, leather and leather products, chat, pulses, meat and meat products and fruits and vegetables. The study used secondary data extracted from the National Bank of Ethiopia (NBE), the Ethiopian Revenues and Customs Authority (ERCA) and the Central Statistics Agency (CSA). To analyze the relationship between the export commodities and their determinants, real gross domestic product (RGDP), real effective exchange rate (REER), trade openness (TOP) and inflation rate (INF) were used, an Autoregressive Distributive Lag (ARDL) model has been used. The model helps to investigate the long-run and short-run relationship between selected commodities and their determinants. The findings of the study revealed that in the long run real GDP and trade openness are positively related to export of major commodities and, they are statistically significant, whereas real effective exchange rate and inflation rate are statistically insignificant. The real GDP and effective exchange rate exhibit statistical significance in the short run. Specifically, real GDP positively influences the export of Ethiopian major commodities, while the real effective exchange rate has a negative impact on the export of these commodities in the short run. Inflation is statistically significant whereas trade openness is statistically insignificant in the short run; however, they came out with the expected negative and positive signs, respectively. For this reason, the government should focus on supporting and incentivizing domestic businesses to enable them to become exporters, open an economy more and more for international traders to create more opportunities for export commodities and to develop new markets for unexploited resources and products; work on stabilizing the foreign exchange market by taking all the necessary measures. And also the government should be implementing more effective monetary, fiscal policies and competitive exchange rate
