The Impacts of Exports in Stimulating Economic Growth in Ethiopia: ARDL Model Analysis
Keywords:
export-led growth; export instability; commodity concentration; Ethiopia; ARDL; error-correction model; Granger causality;Abstract
The export promotion technique is popularly applied to lift the growth of low-income countries; however, a vast number of exporters continue to rely on a set of main goods, the price and demand of which is highly unstable. This paper re-examines the export-growth relationship of Ethiopia using the joint modeling of the performance of exports, export instability, as well as commodity concentration in a stylized Cobb-Douglas model of growth. Our results are based on annual data (1974-2017) and the autoregressive distributed lag (ARDL) model, we perform bounds tests on co-integration, estimate the long-run elasticities, and model the short-run dynamics on the error-correction model, and we perform directionality tests on Granger causality tests (Granger, 1969; Pesaran et al., 2 Findings show that there exists a long-run equilibrium relationship between real GDP growth, gross capital formation, labor participation, exports, commodity concentration and export instability. Exports are positively related to growth, and on the other hand, export instability is negatively related to growth in the long run. The short-run outcomes are also dissimilar; export growth is negatively correlated with growth as well as concentration, and capital formation and instability are positively correlated. Granger tests show export causality (exports- growth). We take these results as indications that export-led policies have higher chances of maintaining growth, in the presence of policies and institutions that minimize earnings volatility and export base diversification.
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Copyright (c) 2026 Natnael Debalkie Teshome(Author)
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