The Impact Of Privatization On Economic Growth Of Ethiopia: Time Series Analysis

Abstract

Currently, the Ethiopian Government is having the objective of expanding Privatization due to a number of advantages from privatization in different aspects. Government is transferring state owned enterprises to private ownership to encourage competitive environment in economy. Therefore, the general objective of this study is to analyze the impact of Privatization on Economic Growth in Ethiopia by using time series analysis. The secondary data were gathered from National Bank of Ethiopia and Ethiopian Privatization Agency for the time span of 1990-2023. After testing for order of stationary, Vector Error Correction Model (VECM) was used to analyze both short-run and long-run relationship among dependent variables. The result of the study reveals that there is both dynamic short-run and long-run relationship between variables included in the study, especially privatization and economic growth.There is positive relationship between Privatization and economic growth in Ethiopia. Based on the result of the study, it is recommended that government should focus on proceeding Privatization so as to bring competitive economic environment which in turn leads to efficiency