Thesis Open Access

Effect of Devaluation of Currency on Ethiopia's Major Export Commodities: The Case of Coffee, Oil Seeds and Hides and Skins

LIBARGACHEW ATAKURIE SHIMELIS


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    <subfield code="a">&lt;p&gt;Devaluation of currency has been stipulated and utilized increasingly as a stabilization device in&lt;br&gt;
developing countries, as part of International Monetary Fund (IMF) mainstream adjustment&lt;br&gt;
programs. The policy measure of currency devaluation has aimed to make export products more&lt;br&gt;
competitive and permutes demand towards domestically produced goods eventually boosting the&lt;br&gt;
overall output of the country. The objective of this work is to add to the existing of multiple&lt;br&gt;
theoretical and empirical studies that have examined the effect of currency devaluation on the&lt;br&gt;
Ethiopian major export commodities using annual time series data for the period 1985-2018. To&lt;br&gt;
determine the relation between dependent and the independent variables, both analytical&lt;br&gt;
(qualitative) explanations and econometric analysis are used in the study. The key results of the&lt;br&gt;
present study revealed that Birr devaluation improve the major export product of Ethiopia in the&lt;br&gt;
short run and deteriorates it in the long run. The study also found that the government, through&lt;br&gt;
outstanding credit loan availability and political instability, may play a key role in increasing&lt;br&gt;
and decreasing exports. Other variables like foreign direct investment and real gross domestic&lt;br&gt;
product with expected positive sign are also found to be statistically significant in explaining&lt;br&gt;
export in the long-run. The study shows that the country to be on the right truck to increase&lt;br&gt;
export earnings in the long run it is better not to devaluate further and the concerned body&lt;br&gt;
should work to strengthen and extend political stability and foreign investment polices since it&lt;br&gt;
helps to increase the performance of export&lt;/p&gt;</subfield>
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