Determinants of Ethiopia's Livestock Exports: Analysis of Gravity Model of Trade

Abstract

This paper aimed to examine the major determinants of livestock exports of Ethiopia through the generalised gravity model of trade approach. Using secondary panel data for 16 years (2002/03–2018/19) and a total of 17 importing partner countries, the gravity model was estimated by the Poisson Pseudo Maximum Likelihood (PPML) and the ordinary least square estimators to confirm the robustness of the findings. The results of the analysis revealed that real gross domestic product, real gross domestic product per capita, the population size of the importing partner countries, and the real exchange rate were the major gravity factors affecting positively livestock export earnings. However, the geographical distance between the capitals of economies was found to be affected negatively livestock export earnings. Livestock exports of Ethiopia were consistent with the gravity model of trade theory. Thus, the Ethiopian government needs to priorities policies and strategies that enhance export earnings from livestock and livestock products, which in turn enhance the overall economic growth of the country.