the impact of trade liberalization on balance of payments ofethiopia
Syed Hasan Qayed,
Published in International Journal of Advanced Research in Economics and Commerce
ISSN: xxxx-xxxx Impact Factor:xx Volume:1 Issue:1 Year: 08 June,2013 Pages:45-53
Abstract
This study examines the impact of trade liberalization on the Ethiopia’s balance of Payment using the data over the period from 1981to 2012.In order to capture the partial effects of trade liberalization on the balance of payments different variables were included into the model and long run and short run relationships were analyzed with the use of ordinary least square (OLS) method and Error Correction Method (ECM) respectively. The results of the study show that the trade liberalization dummy variable and terms of trade variable is statistically significant and negative, implying that the trade liberalization deteriorates the balance of payments. Therefore in order to mitigate this negative impact and to ensure that trade liberalization will increase both the growth of exports and imports and consequently improve welfare, the government should complement the trade liberalization with a well designed macroeconomic reforms along with specific conditionalities.
Kewords
Balance of Payments,Ethiopia,TradeBalance,TradeLiberalisation
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