Economic Significance of Selective Export Promotion on Poverty Reduction and Inter-Industry Growth of Ethiopia

The purpose of this thesis was to assess the economic implications of an export promotion policy on poverty reduction and inter-industry growth of Ethiopia. The study was conducted in four steps. The first and the second steps involved simulation scenarios. Scenario 1 simulated the change in the incidence of poverty when FDI capital was selectively introduced into non-coffee export agriculture. Scenario 2 simulated a situation in which the coffee industry received the same policy treatment as other export agriculture in accessing FDI capital. Step three analyzed inter-industry growth under the two scenarios. In the fourth step, sensitivity analysis was conducted to assess the possible outcomes of Scenario 1 and 2 under fluctuations in world coffee prices and changes in substitution parameters. A micro-simulated CGE model was constructed to determine optimum production, income and consumption. A Beta frequency distribution function and FGT poverty measures were used to examine the changes in three household groups' income distribution and prevalence of poverty. For these analyses, the National Accounting Matrix and the Household Income and Expenditure Sample Survey data set were used. At the macro level, growth in GDP due to expansion of export agriculture was significant. But at a micro level, the magnitude and dimension of economic changes were different with respect to each policy alternative. In the selective export promotion, for instance, only rural households were able to achieve statistically significant income changes. More particularly, about 10 percent of rural households were drawn out of poverty while only 1.7 and 0.5 percent of small and large urban households overcame poverty. When export promotion was assumed to be implemented across the board of all agricultural activities, the welfare gains were extended beyond rural household groups. In this policy alternative, statistically significant mean income changes were observed for both rural and urban household members. Specifically, about 12 percent of rural, 9 percent of small urban and 5 percent of large urban households were able to escape poverty. These achievements were attributed to higher intensification of coffee production and better linkages with other industries to efficiently allocate factors of production where they provided higher rates of return. The increase in income and consumption of millions of coffee dependent households has also stimulated more agricultural and some non-agricultural productions. Simulation results were observed to deteriorate when export promotion was evaluated under world coffee price fluctuation. The negative effect of a price shock, however, was observed to be minimized under alternative an export promotion approach.

Name thesis:degree_name

Ph. D.

Level thesis:degree_level

doctoral

Discipline thesis:degree_discipline

Economics (Agriculture)

Department dc:contributor.department

Economics (Agriculture)

Grantor dc:publisher

Virginia Tech

Year dc:date.issued

2010

Author dc:creator

• Chala, Zelalem Teklu

Chairs dc:contributor.committeechair

• Norton, George W.
• Grant, Jason H.

Committee members dc:contributor.committeemember

• Stephenson, Stephen Kurt
• Taylor, Daniel B.

• Selective export promotion policy
• computable general equilibrium
• poverty reduction and foreign direct investment.

Statement dc:rights

• In Copyright

Licence dc:rights.uri

• http://rightsstatements.org/vocab/InC/1.0/

Dc Identifier Other

etd-09082010-160119

OAI identifier oai:identifier

oai:vtechworks.lib.vt.edu:10919/28910