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Beyond coffee: Toward the diversification of Ethiopia’s exports

 

Presenter: Nora Dihel, World Bank

 

This paper aim to better understand the market and the trade policy distortions that hold back Ethiopia’s exports. We analyze Ethiopian export patterns using a new transaction-level trade data set for the period 2005-2018. Preliminary findings show that, in international comparison, Ethiopian exports are concentrated on agricultural products, mainly coffee and sesame. Ethiopia's exports are characterized by a high level of churning of firms and products. Empirical evidence suggests that exchange rate volatility and difficult access to imported inputs inhibit diversified and stable exports. One of the main policy levers for unleashing Ethiopia’s full potential as an exporter is by facilitating access to imported inputs. Reform of import tariffs as part of the WTO accession offers the opportunity to boost export-oriented manufacturing. Additional measures that ease foreign exchange transactions, simplify export and certification requirements, and increase the predictability of Ethiopia's trade regime could be effective to promote Ethiopia's nontraditional exports.

 

 Welfare Impacts of Recent Rural Road Development in Ethiopia

 

Presenter: Shohei Nakamura, World Bank

 

 This study analyzes the impacts of the recent rural road development in Ethiopia on welfare and economic outcomes. The identification of the impacts relies on a difference-in-differences matching approach, taking advantage of the nationally representative household survey and the original road database, both of which are panel data spanning between 2012 and 2016. The results of the econometric analysis overall suggest that Ethiopia’s recent rural road development has substantially increased household welfare and particularly supported households amid the historically severe droughts. It is estimated that rural roads increased, on average, household consumption by 23 percent between 2012 and 2016. Moreover, households were less likely to fall into or remain in poverty when connected by rural roads in drought areas, indicating the mitigating role of rural roads for drought shocks. The study also finds the effects of rural road developments for agriculture and non-agriculture work in communities farther away from towns. More farmers have come to sell their crops once connected to rural roads. In addition, more households—particularly women and the youth—have engaged in wage jobs in remote communities. By connecting to markets, rural roads have widened the economic base in otherwise physically and economically isolated communities.

 

 

 

Poverty dynamics and economic mobility in Ethiopia: 2012 to 2016

 

Presenter: Arden Jeremy Finn, World Bank

 

This study uses longitudinal ESS data to provide a descriptive report on the dynamics of welfare in Ethiopia between 2012 and 2016. Although poverty rates were relatively stable over this period, there was a large amount of upwards and downwards economic mobility of households. Consumption growth in percentage terms was strongest for those who were in the lowest consumption deciles at baseline, and was flat for those who were initially in the middle of the distribution. The volatility of consumption was far higher in rural areas than in non-rural areas, and so rural households experienced the highest levels of mobility. Nearly a quarter of the rural population entered poverty between 2012 and 2016, with a large proportion exiting poverty over this period as well. A profile of chronically poor versus transitorily poor households shows that chronic poverty is associated with larger households, male headship, and low levels of educational attainment. Differences on the basis of location and access were very small, with no significant differences between the groups in terms of distances to population centers and markets. The longitudinal dimension of the dataset is exploited to model some of the determinants of poverty exit and poverty entry over time. There were striking differences across the five distinct agro-ecological zones, and by region. Households in Oromia and Tigray were the most likely to have exited poverty over time, especially compared to households in SNNP. In addition, those living in Amhara and SNNP were far more likely to have entered poverty between 2012 and 2016 compared to other regions during this period.