An economic inquiry into Ethiopian exports: Pattern, dynamics, characteristics and survival

Berihu Assefa Gebrehiwot presented a session on Ethiopia’s export market at the Ethiopian Development Research Institute (EDRI) to 42 attendees. He described the export market in the context of its performance and dynamics over the period 1995 to 2014, and covered different dimensions including:

1. Ethiopia’s trade and export patterns
2. Ethiopia’s export growth characteristics and the drivers of growth or contraction
3. How diverse and concentrated exports are in terms of exporters, products and markets
4. The extent to which Ethiopian exporters survive beyond their first year of entry to the export market

The conclusions of this research showed that Ethiopia’s export base has remained quite limited, both in absolute terms and compared to countries with a similar level of development, which are seen in, for example, the numbers of exporter and export products, both of which remain very small. From the analyses on diversification, this reveals that even though merchandise exports have grown by 15.5 percent over the past decade, most of this growth was due to expansion of already existing export products in existing markets (described as intensive margins), rather than diversifying into new products and new geographic markets (described as extensive margins).

Conversely, the analysis on exporting firms shows that there is a high degree of dynamism with high levels of entry and exit rates. Yet, despite high entry levels, there remains a huge challenge for new entrants to survive beyond the first year of trading. Diversifying into new products and new geographic markets contributes little to overall export growth, and this suggests that attrition rates, beyond experimentation, are very high with many casualties among new entrants.

From a policy perspective, some of the key considerations emerging from these results are:

• If most of the high export values are coming from a few top exporters, should the government aim to promote exports through SMEs?
• Should policy target more entry level exporters or place effort into helping them to survive?
• Is knowing what to export is as important as knowing where to export?

To see Berihu Assefa Gebrehiwot’s presentation, click here