Factors influencing export of haricot bean in Ethiopia

Abstract

The objective of this study is to analyze factors influencing the export level of haricot beans in Ethiopia over the period 1981 to 2020. The study applied an ARDL model bound test approach. The study portrayed that GDP, export price, real exchange rate, and inflation rate had positive and significant impact on the level of haricot bean export. GDP showed positive and significant impact of GDP on export of haricot beans because higher economic growth of a nation will create higher capacity to export the product. A one period lagged export quantity, GDP, export price, and real exchange rate had negative impact on current export level of haricot beans. The negative and significant effect of lagged real exchange rate exemplifies that the shocks in real exchange rate during preceding year will discourage exporters to participate in international trade in subsequent year. Haricot beans producer price had negative impact on current year’s haricot beans export level in both the long- and short-run, implying that the volatility of domestic prices will discourage exporters to engage in foreign export trade. Real exchange rate revealed negative and significant impact on haricot beans export level in the short-run while it had positive and significant impact on haricot bean export in the long-run. Conversely, GDP, export price, and inflation rate had positive impact on current year’s export level of haricot bean both in the long- and short-run. In view the results of this study, it is recommended that the macroeconomic policy reforms aimed at improving the growth of GDP that enhances the total export supply of the countries to the rest of the world should be taken. The significant relationship between the real exchange rate and export performance indicates the need to ensure a stable exchange rate policy in order to avoid the exchange rate risk.