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Evaluating the impact of devaluation of currency on export growth in Ethiopia

Author(s): Zelalem Belayneh
Abstract: This study evaluates the impact of currency devaluation on export growth in Ethiopia. The specific objectives of the study were: to examine the effect of currency devaluation on import and export so as to check the martial learner condition for Ethiopian economy by estimating an export and import equation. This study uses time series data covered for 30 years, from 1989/90 to 2018/19. The Ordinary lest square (OLS) regression method was used for analysis: in addition, in this study the Augmented Dickey Fuller test (ADF), Diagnostic, Stability Tests, co-integration and error correction model (ECM) were employed to be sure that econometric model is appropriate. The finding of this study shows that the real gross domestic product and foreign direct investment have appositive effect on export growth in short-run and long run in Ethiopia while devaluation of birr affects export and import adversely, therefore, based on this finding the researcher recommend that currency devaluation is better to be the last measure taken by the Ethiopian government to stimulate export growth in Ethiopia.
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