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Exploring the Relationship between Trade Liberalization and Ethiopian Economic Growth

Bekele, Yetsedaw Emagne (2017): Exploring the Relationship between Trade Liberalization and Ethiopian Economic Growth.

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Abstract

Theoretical and empirical economic literature has shown the economic growth of countries is related to both liberalization and international trade integration. The main purpose of this study is to apply this knowledge to the Ethiopian case and estimate the impact of trade liberalization on Ethiopian economic growth. The study has employed an Error Correction Model (ECM) for the time series data ranging from 1980 to 2016 to examine the economic effect of trade liberalization on the Ethiopian economy. The empirical results show that there are both short run and long run relationships between liberalization and economic growth. More specifically, trade openness has had a positive and significant impact on economic growth of Ethiopia. Therefore, the government of Ethiopian should have to design a more opened trade policies so as to reap the benefits associated with integrating ones economy with the world economy.

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