Determinants of Recent Economic Growth in Ethiopia

Bulo Feyisa,Tadele Feyera

doi:10.11648/j.ijimse.20200501.12

Abstract

This study tried to identify the major sources of recent economic growth in Ethiopia for the last thirty three years starting from the year 1980 up to 2013. The study has been under taken with the use of both econometric and descriptive analysis techniques and various diagnostic tests like stationary test (by using augmented dicky-fuller test), multicollinearity test by using vif test), heteroscedasticity test (by using Breusch-pagan test), omitted variable (by using ov-test) both in the lung-run and short-run effect of independent variables on dependent variable. In addition, tables, figures and graphs were used. The study employed time series data for both the dependent (RGDP) and independent variables. The explanatory variables including domestic investment, labor force growth, real effective exchange rate, remittance and corruption were investigated. The analysis is carried out through an extensive review of relevant literature and macroeconomic model of economic growth. The findings show that growth in Ethiopia is positively affected by domestic investment, labor force growth, and remittance. Therefore, the study recommended that increasing domestic investment through promoting public and private sectors, effective use of the growing labor force and proper use of remittance for capital formation and distribution over all sectors as the directions to achieve rapid and sustainable economic growth in Ethiopia.

Highlights

Societies in general aspire for development [1]
As witnessed by the recent experiences some East Asian countries have recorded astonishing economic performances while the sub-Saharan Africa (SSA) countries have not been able to obtain the kind of sustained growth which commonly regarded as premise of development
As can be observed from the result at 1% rise in domestic investment, will increase the economic growth of Ethiopia by 0.19%, citrus paribus, according to the long run result, a 1% rise in labor force, will

Summary

Introduction

Economic growth explains much of the development aspect; countries spend much their resource and time in an effort to ensure sustained economic growth. The source of economic growth is a question great concern for many economists who are interested to know and search for factors enabling some countries to grow and develop while others are suffering from poverty [2, 3]. Countries spend much of their resources and time in an effort to ensure sustained economic growth. As witnessed by the recent experiences some East Asian countries have recorded astonishing economic performances while the sub-Saharan Africa (SSA) countries have not been able to obtain the kind of sustained growth which commonly regarded as premise of development. Ethiopia belongs to SSA countries where poverty is wide spread though the country recently experienced appealing economic growth. According to international monetary fund (IMF) world outlook 2010 report, Ethiopian economy gross domestic product grew annually by average 11% through the years 2004 to 2009 [3]

Objectives

Methods

Findings

Conclusion