THE ROLE OF EXPORTS IN ECONOMIC GROWTH WITH REFERENCE TO ETHIOPIAN COUNTRY

This study applies the Cobb-Douglas function model to analyze the effects of exports on economic growth in context of Ethiopian economy. To determine the relationship between export and economic growth, an attempt will be made to use econometrics techniques of analysis (co-integration system) by using the RATS software package for the time series data from 1950 to 1986. The lack of capital stock data is overcome by using the ratio of real investment to real gross domestic product (I/Y), in a place of capital stock while lack of labour force data is overcome by using the real gross domestic product per capita. The results suggest that the real export and (I/Y) are co-integrated with real GDP per capita. These results of the findings support the idea that the rate of growth of real exports has a positive effect on the rate of economic growth in context of the Ethiopian economy. Even strong positive relationship exists between real export and real growth domestic product per capita in long run rather than in short run when it is compared real exports with that of (I/Y). Thus, the contribution of real exports to economic growth in context of Ethiopian economy is greater in long run than in short run.