Abstract:
This thesis examined the contribution of export diversification on economic growth in Ethiopia using
time series data from 1982—2017 for 36 years. National Bank of Ethiopia (NBE), World bank (WB),
Ministry of Finance and Economic Development (MOFED), Ministry of Education (MoE) Ethiopia,
Central Statistics Authority (CSA) of Ethiopia and United Nations Conference on Trade and
Development (UNCTAD) used for the data sources. The research used both descriptive and econometric
analysis. The major variables identified in the study are export diversification, capial accumulation,
trade openness, government expenditure, real effective exchange rate and population growth. With the
help of cointegration and vector error correction analysis, the contribution of export diversification on
real gross domestic product growth was assessed in the long-run as well as in the short-run. The results
suggest that the contribution of export diversification on economic growth works through pessimistic
view [Argument against export diversification] in the short-run and optimistic view [Argument export
diversification] in the long-run i.e. i export diversification promotes economic growth only in the longrun.
In the short-run, it discourages economic growth in Ethiopia. The study also found that the
government expenditure, capital accumulation and trade openness are the key factor that promotes
economicgrowth. Key finding in this study, export diversification has showed positive contribution to
Ethiopian economic growth. The study suggests that the country should have to diversify its export
commodities where it has comparative advantage. In addition, the country should also increase its
trading partner countries.
