This paper assesses the patterns of export product diversification and identifies its determinants in four east African countries particularly focus on the case of Ethiopia. In addition to this, the study develops lessons from East Asian countries as best experience to know the way they have followed to achieve export product diversification with less than three decades. The research conducts Herfindahl-Hirschman index to see the degree of export product diversification, balanced panel data to examine determinants of export product diversification using GLS random effect model and descriptive statistics for the year 1995-2014.
The statistical data collected from WDI, UNCTAD, ERCA, NBE and ADI data bases. The study also conducts Huasman specification test to select the best model for the study and Breusch-Peagan test to check the existence of heteroscedasticity and used one year lag-values in log form to detect the endogeneity problems and some of the variables like labor force and saving effect may not observed immediately on diversification. According to the finding, the HHI for east African countries export product diversification shows as they concentrated on few products. However it shows an improvements from year to year with gradual changes. In 1995-2014 Ethiopia, Rwanda and Ugandan export highly concentrated but since 2001 Ethiopia and Uganda export performance shows moderately improved compare to the previous years.
The regression result of the study suggests that exchange rate, gross domestic saving, inflation, PGDP, openness to trade, labor force and foreign direct investment suggests as they have positive contribution to export diversification. Likely, the regression result of labor force showing the highest relatively compare to other explanatory variables. [...]
Table of Contents
CHAPTER ONE
Introduction
1.1. Background of the study
1.2. Statement of the problem
1.3. Object of the study
1.3.1. Major objectives
1.3.2. Sub-objectives
1.4. Hypothesis of the research
1.5. Scope of the study
1.6. Definition of terms
CHAPTER TWO
2. Reviews of literature
2.1. The Concept of Export Diversification
2.2. Theoretical Review
2.1.1. Ricardian Model
2.1.2. Heckscher Ohline Model
2.3. Empirical literature
2.3.1. Export product and export revenues earning in Developing countries
2.4. East Asian countries experience on export product diversification
2.4.1. Developed Suitable policies
2.4.2. Strong Saving Culture
CHAPTER THREE
3. Methodology and data sources
3.1. Research design
3.2. Source of data
3.3. Model Specification
3.3.1. Export diversification Model
3.3.2. Determinants of Export diversification Model
1. Gross Domestic Saving
2. Exchange rate
3. Foreign direct investment
4. Inflation
5. Per Capital GDP
6. Trade openness
CHAPTER FOUR
4. Analysis and interpretation of data
4.1. The patterns of Export diversification in some of East Asian countries.
4.2. Descriptive Statistics for dependent and independent variables
4.3. The regression Analysis in four East African countries
4.4. The Trends of Export Product Diversification in Ethiopia
4.4.1. Trends of Saving and foreign Direct Investment
4.4.2 The trends of export product diversification and foreign direct investment
4.4.3. The trends of coffee and other six major export products share
4.4.4. The trends of primary and manufacturer export product share
CHAPTER FIVE
5. Conclusion and policy recommendation
5.1. Conclusion
5.2. Policy recommendation
Objectives and Research Themes
This thesis investigates the patterns of export product diversification and identifies the primary determinants influencing this diversification in four East African nations, with a specific focus on Ethiopia. The research aims to establish why these countries remain heavily reliant on a narrow range of primary commodities and seeks to derive policy lessons from the successful export-led growth experiences of East Asian countries.
- Analysis of export diversification levels using the Herfindahl-Hirschman Index (HHI).
- Econometric examination of determinants such as labor force, GDP, saving rates, and foreign direct investment.
- Evaluation of the impact of trade liberalization and policy frameworks on export expansion.
- Comparative study between East African economic structures and East Asian developmental success.
- Policy recommendations to foster value-added manufacturing and sustainable economic growth.
Excerpt from the Book
1.1.Background of the study
The countries in which their economy depends on few commodities deemed to have lower growth prospects because of unfavorable characteristics on their export in the world markets and negative feature of natural resource extraction and production. On this regards, at the end of 1970s the fall in prices left many commodity dependency countries, especially Africa with a large amount of debts and decline in flow of foreign resource to finance them in 1980s (OECD, 2003).
In addition, different research paper has shown as export earning of most developing countries in general and African countries in particular heavily depends on very few primary commodities. On this regard (SAMEN, 2010) explained as the exports of primary commodities are extremely vulnerable to external shocks. This factor makes developing countries policy makers facing challenges on expanding export revenues and to have stable and sustainable export revenue earning.
Over the last decades Sub-Saharan African export has dominated by few primary products like coffee, gold, oilseed, vegetables and, hide and skin. Those products constitutes above 80% of total export of the countries (World Bank, 2006). It indicates that the major part constitutes agricultural products and production of those agricultural products are depends on rain feed agriculture which are vulnerable on various environmental related risks.
Sub-Saharan African countries economies surrounded by different internal and external problems which led to stay with low level of capital accumulation. Dependency on few primary commodities, low investment level both domestic and through FDI and low level of infrastructure development considered as the major factors of SSA poverty trap (UNU, 2006).
Summary of Chapters
CHAPTER ONE: This chapter introduces the research context, the problem statement regarding commodity dependency, and defines the primary objectives and scope of the study.
CHAPTER TWO: This section reviews existing theoretical models of international trade and empirical literature regarding export diversification, including lessons learned from the East Asian experience.
CHAPTER THREE: This chapter details the research methodology, specifically the econometric models used and the sources of the secondary data collected for the analysis.
CHAPTER FOUR: This section presents the analysis and interpretation of the collected data, examining the trends in export diversification and the results of the regression analysis for East African countries.
CHAPTER FIVE: This chapter provides the final conclusions based on the research findings and offers policy recommendations aimed at enhancing export diversification and sustainable economic development.
Keywords
Export Diversification, East Africa, Ethiopia, Herfindahl-Hirschman Index, Economic Growth, Primary Commodities, Foreign Direct Investment, Gross Domestic Saving, Trade Liberalization, Manufacturing, Agricultural Products, Macroeconomic Stability, Comparative Advantage, Export Revenues, Structural Transformation.
Frequently Asked Questions
What is the core focus of this research paper?
The paper primarily focuses on assessing the patterns and determinants of export product diversification in four East African countries, with a deep dive into the specific case of Ethiopia.
What are the central thematic fields addressed in the study?
The central themes include the reliance on primary commodities, the impact of macroeconomic variables (like savings, inflation, and exchange rates) on export performance, and the lessons that can be drawn from East Asian industrialization strategies.
What is the primary goal or research question?
The goal is to understand why East African countries have failed to significantly diversify their export baskets and to identify the specific factors that, if addressed, could lead to more sustainable, diversified export-led growth.
Which scientific methods are applied?
The research uses both descriptive statistics and quantitative econometric techniques. Specifically, it employs the Herfindahl-Hirschman Index (HHI) for measuring concentration and a Generalized Least Squares (GLS) random effect model for the regression analysis.
What is covered in the main section of the paper?
The main section covers the literature review of trade theories, the methodological framework, empirical data analysis of the four East African nations, and a specific trend analysis of Ethiopia’s export reliance on coffee and other primary goods.
Which keywords best characterize this work?
Key terms include Export Diversification, East Africa, Ethiopia, Foreign Direct Investment (FDI), Economic Growth, and Primary Commodity Dependency.
How does the study use the East Asian experience as a benchmark?
The paper uses the East Asian "tiger" economies as a successful model, highlighting how they utilized export-oriented policies, domestic saving cultures, and a shift from labor-intensive to high-value manufacturing to achieve rapid development.
Why is the role of saving rates emphasized in the context of Ethiopia?
The study identifies that low domestic saving rates in Ethiopia limit the capital available for the private sector, which in turn acts as a major barrier to financing the transition from primary commodity exports to a more diversified industrial base.
- Quote paper
- Gebeyehu Tuji Benti (Author), 2016, The patterns of export product diversification and its determinants in four East African countries. Particulary in case of Ethiopia, Munich, GRIN Verlag, https://www.grin.com/document/358796
