Modeling Determinants of Ethiopian Export: A Gravity Approach

Abstract:     
The gravity equation has been often and effectively used for nearly thirty years to further understanding of the determinants of bilateral trade flows across countries and, subsequently, to analyze commercial policy measure. This study therefore estimated the determinants of Ethiopian export for the period 2003 to 2007 using a gravity model approach and analyses. The estimation was done for 30 main importers. The paper found that importer’s GDP has a positive effect on exports of Ethiopia, while importers population has a negative impact on the export. The negative effect of the importer’s population suggests that the trading partners become self sufficient as their populations grow. Distance has a negative and significant effect on the exports of Ethiopia. While sharing common border has significant and positive effect to Ethiopian export. I have also found negative relation ship between Ethiopian export and trade agreement and/or preferential trades. The negative effect might be because of the preferential trade is given not only for Ethiopia but also for all the LDCs which result in high competition among them as a result Ethiopia may not resist the high competition. Regarding the trade agreement, COMESA may be the common rules are not strong and there is “beyond the border” and “behind the border” constraints which lessen the effectiveness of the agreement.

Keywords: Gravity Modeling, Ethiopian Export

JEL Classification: F, F1

working papers series