Unlocking Export Potential and the Influence of Country-Specific Characteristics: Evidence from Ethiopia

Abstract

Export growth is integral to Ethiopia's development agenda. But,
notwithstanding various trade policy refonns, exports have not lived up to
expectations. This paper examines the gap between Ethiopia 's actual and
potential exports and the extent to which country-specific social, political
and institutional factors have impacted the export gap. A stochastic frontier
analysis of gravity model of trade is applied to panel data that covered
Ethiopia 's 45 trading partners during 2001- 2012. Empirical results
revealed that Ethiopian exports are velY distant from their frontier levels
with significant irif/uence of country-specific socio-political-institutional
constraints. Thus, the paper stresses the need for Ethiopia to look beyond
trade policy if it is to realise its jilil export potential