Exploring the Relationship between Trade Liberalization and Ethiopian Economic Growth

Theoretical and empirical economic literature has shown that the economic growth of countries is related to both liberalization and international trade integration. The main purpose of this study is to apply this knowledge to the Ethiopian case and estimate the impact of trade liberalization on Ethiopian economic growth. The study has employed an Error Correction Model (ECM) for the time series data ranging from 1980 to 2016 to examine the economic effect of trade liberalization on the Ethiopian economy. To examine the structural break resulting from regime change, the model incorporated a dummy variable and the inclusion of the dummy variable reveals about the significant impact of policy change. The empirical results show that there are both short-term and long-term relationships between liberalization and economic growth. More specifically, trade openness has had a positive and significant impact on the economic growth of Ethiopia. Therefore, the government of Ethiopia should integrate and open the economy. Furthermore, it should design a more open trade policy so as to reap the benefits associated with integrating a country’s economy with that of the world.

理论与实证经济研究领域的既有文献均已证实，一国的经济增长与贸易自由化及国际贸易一体化均存在显著关联。本研究的核心目标在于将上述研究结论应用于埃塞俄比亚情境，估算贸易自由化对埃塞俄比亚经济增长的影响效应。研究采用1980至2016年的时间序列数据，运用误差修正模型（Error Correction Model, ECM）分析贸易自由化对埃塞俄比亚经济的影响。为检验政权更迭引发的结构断点，模型纳入了虚拟变量；该变量的回归结果显示政策变动存在显著影响。实证结果表明，贸易自由化与经济增长之间同时存在短期与长期均衡关系。具体而言，贸易开放度对埃塞俄比亚经济增长具有显著正向作用。据此，埃塞俄比亚政府应推动经济一体化与对外开放，并制定更为开放的贸易政策，以充分融入全球经济体系并获取一体化发展带来的红利。