employs  and finance economic model in ethiopia
234481023
The impact of tax revenue on economic growth: time series evidence from Ethiopia
Tax revenue is believed to provide developing countries with a stable and predictable fiscal environment to promote growth and to finance their social and physical infrastructural needs. However, the prior empirical results across different countries witness that the relationship between government tax revenue and economic growth can be negative, positive or neutral depending on countries economic exposure and stabilization policy experiences. Thus, this study examined the effect of tax revenue on economic growth of Ethiopia, from 1980 to 2018 by employing Autoregressive Distributed Lag (ARDL) approach. The enquiry also used Vector Error Correction Model (VECM) in order to observe how fast the co integrated variables convergence in long run and found expected negative sign. The stationarity properties of the data were detected using ADF and PP test statistics and the result confirms all the variables are stationary at level and first difference evidencing the effectiveness of ARDL model. The ARDL bound test result indicates that there is long run relationship between RGDP and independent variables. The empirical results are indication of long and short run positive impacts of government tax revenue on economic growth in Ethiopia. The result suggests that tax revenue exerted a positive and statistically significant effect on economic growth both in the long run and short run implying that tax revenue enhances economic growth in Ethiopia. Furthermore, government expenditures on education and health as proxy of human capital and rate of inflation variables show a statistically significant and expected effect on real GDP in Ethiopia. Hence, the policy maker needs to give more effort to expand the tax base and should increase the efficiency of collection to stimulate overall economic growth in long and short run. JEL code: H2; O4; C22
Deresse Dalango
52207891
Modeling the impact of entrepreneurial attitude on self employment intention among engineering students in Ethiopia
Entrepreneurship is a worldwide phenomenon with economic growth across the globe that is rendered by the emergence of new and innovative business start ups. Thus, the main objective of this research was to model the impact of entrepreneurial attitudes on self employment intention among final year engineering students in Bahir Dar Institute of Technology, Debre Markos University and University of Gondar, Ethiopia, in 2017. To achieve the objective of the study, a survey research approach was employed. Questionnaire and interview were the instruments used, and stratified sampling technique was adopted to select 921 respondents from a population of 4327 final year undergraduate engineering students in 2016/2017 academic session. To analyze the data, descriptive statistics, chi square test, principal component factor analysis, and binary logistic regression analysis were employed. The descriptive result revealed that about 57.4% of the students had an intention to be self employed while 42.6% do not have an intention. The principal component factor analysis was used to reduce the set of variables by grouping variables with similar characteristics together and generates new variables (factors) These methods help the researchers to transform the number of correlated variables into a smaller number of uncorrelated variables. The logistic regression analysis was performed to investigate the effect of the predictor variables on self employment intention status of students. The results showed that entrepreneurial education/training and entrepreneurial attitudes significantly predicts students' self employment intention. Accordingly, information and opportunity seeking, creativity and problem solving skills, achievement and instrumental readiness, self confidence and self esteem, goal setting, entrepreneurship education/training, business owned family background, prior business experience with family, access to finance/capitals for startup, and networking and professional contacts were found to be significant predictors at 5% level of significance. These factors had positive relationship with self employment intention at 5% level of significance. In the meanwhile, demographic factors (such as age, gender, and marital status) and socio economic factors (such as parents' occupation, colleagues' business background, means of finance, discouragement by external environment, and clear future business idea) are not significant predictors at 5% level of significance. The study recommends that the government as well as the universities should design programs that facilitate entrepreneurship to change the mindset, attitude, and intention of those students who do not have knowhow about entrepreneurship as a future career.
M Ayalew Shumet Amare Zeleke
230525540
The Impact of Public Education Expenditures on Graduate Unemployment: Cointegration Analysis to Ethiopia
Unemployment is amongst most pressing economic challenges the Ethiopian economy has long been experiencing. Though the country succeeded in targeting overall unemployment most recently, graduate unemployment continued trending at higher rates over the years. We examined the impact of government education spending on the rate of graduate unemployment in Ethiopia, using yearly series of data over the periods spanning from 1991to 2019. The results of Augmented Dickey Fuller test revealed difference stationarity for all series of interest; while the suggested order of integration was one. The results of Johnson's cointegration test indicated the existence of long run equilibrium relationships among the variables entered the test model. In determining the impacts of inflation rate (CPI) economic growth (RGDP) and public education spending on graduate unemployment, we employed Vector Error Correction Model as it enables us capture the short run and long run outputs instantaneously. According to VECM regression results, inflation rate and expenditure on education were found to have significant impact on the long run growth rate of graduate unemployment. While the inflation rate contributed positively, government expenditure has negative influence on the rate of graduate unemployment towards validating the Keynesian theory of employment. Besides, the impacts of both variables were found to persist in the short run. Both are estimated significant and consistent in sign in the short run. However, economic growth was found to have a trivial role in explaining the rate of graduate unemployment in both the short run and the long run periods. Moreover, the results of VEC causality analysis revealed a significant unidirectional causality running from economic growth towards public funds available for financing education; but no causality was suggested in reverse. We recommend a drastic measure to advance the education sector through suitable investments in a manner that will help in skills development, productivity enhancement and entrepreneurship growth.
Amsalu Dachito Chigeto Minyahil Alemu Berhanu Alemu
88510507
Official development assistance (ODA) public spending and economic growth in Ethiopia
The objective of this research was to analyse the role of Ethiopia's government expenditure in economic growth and the importance that ODA has played in financing government spending. The study employed both descriptive and econometric analyses. In the econometric analysis, Ram's (1986) model is adopted to scrutinize the impact of different composition of public spending on economic growth. The study revealed that public spending on physical investment and human capital development have positive contributions on economic growth while spending on consumption affects growth negatively. Besides, as opposed to those who argue that ODA is detrimental to the growth of the recipient country, the study found a positive contribution in Ethiopia's growth, particularly during the last eight years when the country achieved high growth rate. However, the country is highly dependent on aid and loan, which made it susceptible to changes in the flow of aid. There was also a prevalence of the problem of over indebtedness as the export performance and the foreign exchange earning capacity of the country remained low. Key words: Public spending, official development assistance (ODA) debt, economic growth, Ethiopia.
Tofik Siraj
153042535
Ethiopia?S Growth Acceleration and How to Sustain It?Insights from a Cross Country Regression Model
Ethiopia has experienced a growth acceleration over the past decade on the back of an economic strategy emphasizing public infrastructure investment and supported by heterodox macro financial policies. To analyze the country's growth performance during 2000 13, the paper employs a neoclassical cross country System Generalized Method of Moments regression model. The analysis finds that accelerated growth was driven by public infrastructure investment and restrained government consumption, and supported by a conducive external environment. Macroeconomic challenges arising from declining private credit, real currency overvaluation, and relatively high inflation held back some growth. The model accurately predicts Ethiopia's growth over the period of analysis and is robust to country specific parameter heterogeneity and alternative infrastructure variables. Looking ahead, model simulations under alternative policy scenarios are indicative that growth may decelerate in the coming decade, making it challenging for Ethiopia to attain its middle income country target by 2025. Although simulated growth rates do not vary much by policy scenario, the paper discusses some of the emerging risks associated with a continued reliance on the current infrastructure financing model and potential future adjustments.
Lars Christian Moller Konstantin M Wacker
155421001
EMPIRICAL ANALYSIS OF THE CONTRIBUTION OF VAT FOR ECONOMIC DEVELOPMENT AND SOCIAL SPENDING IN ETHIOPIA
A THESIS SUBMITTED TO THE SCHOOL OF BUSINESS AND PUBIC ADMINISTRATION OF ADDIS ABABA UNIVERSITY IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF SCIENCE IN ACCOUNTING AND FINANCE%%This paper discussed some recent critical literature on value added tax (VAT) in Ethiopia relating to its contributions for economic development and its impact on the Social Spending in Ethiopia. The study employed the tools of quantitative empirical analysis technique to evaluate the contribution of VAT for the development of Ethiopia economy. The generic central objective is to examine the contribution of VAT for the development of Ethiopia economy and its impact on social spending, equity. The tools of empirical analysis used are multiple regression models as abstractions of the respective sectors considered in the study and also descriptive statistics. The study considered a vector of economic development indicators as dependent variables and regressed each on VAT revenue proceeds and other income (loan, donation, grant, taxes excluding VAT revenue, and others) of Ethiopia State for the study period (1995 2002 E.C. or 2003/04 2009/10 G.C. The state economy is disaggregated into five strategic economic sectors in the development process, and multiple regression models specified to enhance isolated analysis of each sector. Development aspects that are considered include infrastructural development, education sector development, agricultural and natural resource development, health sector development and other development sectors. Moreover, in order to make clear decision and summarize the study, the summation of all capital expenditure on the respective sectors were taken and regressed. The analysis showed that, except education sector, VAT revenue contributed positively for the development of the respective sectors. On the aggregate (model VI) the analysis showed that VAT revenue had a considerable contribution for the development of the economy during the period under study. However, the contributions are statistically significant only to health and agricultural and natural resource development sectors. Therefore, it can be said that, the VAT tax revenue was unable to neutralize the regressivity of VAT tax levy in Ethiopia because its unsystematic exemptions, tax structure, and tax system. Thus, the study concludes that various sectors of the economy of Ethiopia are yet to benefit significantly from VAT revenue expenditure of the state government. Consequently, the paper calls for equity in sectoral spending of VAT proceeds in Ethiopia State in order to ensure balanced development and sustainability of the emerging mega city status of the state.
Dakito Abebe Yitayew
208084384
ADDIS ABABA UNIVERSITY SCHOOL OF GRADUATE STUDIES DETERMINANTS OF PRIVATE SAVING IN ETHIOPIA BY: AYELE WODAMO
Saving is an important instrument to enhance economic growth by providing sufficient funds for investors. However, empirical literature that relates to mobilizing savings in Ethiopia is in broad aggregate forms and almost no work is conducted on determinants of private savings in Ethiopia. For this reason this study empirically investigates the determinants of private saving in Ethiopia by using annual data over the period 1980 2015. Accordingly to identify the factors that affect private savings in Ethiopia the researcher employs ordinary least squaresand error correction models fitted for time series data. The variables examined are real gross domestic product, inflation, government fiscal balance, real deposit rates, current account deficit and financial development indicators. The results indicate that private saving in Ethiopia is a response for variables, real gross domestic product, government fiscal balances, real deposit rate and financial developments but it is not responsive to inflation and current account deficit in the long run. In addition to this granger causality tests indicate that economic growth causes privates savings in Ethiopia which is in line with Keynesian theory, that it is higher economic growth that leads to higher saving.Finally, the study recommends that policy makers or government work to improve income levels of society to address adverse effects on private saving. Likewise the study suggests that fiscal policy should be designed and implemented in a prudent way such that it cannot lead to crowding out private saving. LISTS of TABLES Table 4.1Unit root test of variables at level Table 4.2 Unit root test of variables at first difference Table 4.3 co integration test Table 4.4 short run model out put Table 4.5 results of diagnostic checking Table 4.6 Granger causality test LISTS of Figures Figure 4.1 Trends of real GDP growth rate Figure 4.2 Trends of private saving as a percent of real GDP Figure 4.3 Trends of government budget deficits as a percent of GDP Figure 4.4 Trends in Real Deposit rate and Inflation rate LISTS of Acronyms and Abbreviation ADF Augmented Dickey Fuller test CA Current Account Deficit CPI Consumer Price Index ECM Error Correction Model FB Fiscal Balance FD Financial Development NBE National Bank of Ethiopia OLS Ordinary Least Square RR Real Interest rate RGDP Real Gross Domestic Production MOFEC Ministry of Finance and Economic Cooperation VAR Vector Auto Regressive Model
155450183
Determinants of Micro Finance and Credit Institutions in Farm Business, Kilte Awlaelo District, Eastern Zone of Tigray Region, Northern Ethiopia
Credit provision is one of the principal components of rural development, which helps to attain rapid and sustainable growth of agriculture. Agricultural lending involves giving out of credit (in cash and kind) to small scale farmers for the purpose of farming. There is no doubt about the crucial roles of credit in economic development. In spite of the importance of loan in agricultural production, its achievement and repayment are burdened with a number of problems especially in the small holder farming organized as cooperatives. Currently, there are different organizations involved in providing credit to beekeeping cooperatives of the Kilte Awlaelo District. The organizations are trying to organize beekeeping cooperatives, promote both improved and traditional beekeeping practices by providing credit. The main objectives of these cooperatives are to improve the living standard and market access of the members and repay their credit on time. However, the cooperatives are unable to payback their credit according to the contract due to many factors. Therefore, this research aimed at analyzing and examining the determinants of loan repayment on beekeeping cooperatives. To meet this objective data was collected and multistage sampling and simple random sampling methods were employed to select sample beekeeping cooperatives and sample cooperative members. Besides, key informant interview and focus group discussion was held. Based on this a total of 170 respondents were included in the study. The analysis was made using descriptive statistics and logistic model using 15 variables. Based on the result of the analysis age, family size, annual income, livestock ownership, access to additional source of credit, loan size and supervisory visit were found significant to enhance loan repayment at P<0.10. However, sex of cooperative members (taking male as reference) and number of dependent are factors that significantly increase the probability of loan default at P<0.10 level of significance. Therefore, based on the results obtained in this study, it is recommended that credit institutions or lending agencies should look out for the demographic and socio economic characteristics that significantly influence loan repayment before granting loans and advances to beekeeping cooperatives to reduce the incidence of loan defaults. Besides, effective supervision, training, lending appropriate amount of loan and promoting woman participation on beekeeping cooperative, so as loan default could be minimized.
Z H Sllase Abadi Teklehaimanot
169674222
Determinants of Private Agricultural Investment in Assosa Zone, Benishangul Gumuz Region, Ethiopia (Micro Level Analysis)
Ethiopia is one of the leading agrarian economies and having wide resources potential to attract domestic and foreign direct investment. The objective of this study was to identify and analysis the micro determinants factors for private agricultural investment in the Benishangul Gumuz Regional State in Assosa zone, Ethiopia. A survey was conducted on 123 agricultural investors. Descriptive analysis and econometric methods of data analysis were employed to analyze the surveyed data. The results of micro level study showed that age, access to credit, access to infrastructure facilities, access of market, bureaucratic red tape, investment incentives and agro climate factors are siginificantlly determinants of agricultural investment in the study areas on amount of capital to invest, assume other variables in the model were constant. The results of this study also revealed that most of the problems encountered by agricultural investors were lack of commitment to invest, lack of adquate finance and institutional constaints. The intervention program might be viewed as strengthening institutional set up and improves the micro economic stability in one hand and encourage investors to invest on the others hand. This could be done by establishing true, independent and efficient institution, through minimizing bureaucratic red tape, and eliminating unnecessary regulation so as to create access to credit, provide infrastructure facilities to the agricultural investment. The regional governments should work with investors to make conducive investment climate and open up its doors to investors by applying approprate policies and investment incentives to achieve the long term development of the regional economy. Keywords: Determinants, agricultural investment, Status of investment, Tobit model
Chane Adem
56406127
Predictors of National Saving: A Time Series Analysis to the Economy of Ethiopia
Being an important source of loanable funds, which in turn, are allocated for financing investment undertakings, national saving plays vital role in explaining the macroeconomic performance. No doubt, efficiently utilized savings have a large potency in building bases for strong and sustainable economic growth and the overall wellbeing of the nations. However, as the level of resources diverted to the saving account are subject to various shocks, both internal and external, most economies are still challenged in maintaining resources in the form of saving. As a result, investment decisions in particular and economic policy making at large are highly challenging especially in LDCs. Motivated by this scenario, the present study was principally intended to examine the potential predictors of national saving in the context of Ethiopian economy using the time series data set for the period serially ranging from 1970/71 to 2016/17. After confirming the stationarity among individual variables entered the saving model via ADF approach, the Johnson's cointegration test was employed to test the existence of long run relationship among them. Accordingly, the test procedure has detected the presence of one way in which the variables move together in the very long run. The short run issues were captured via ECM regression. CPI inflation, foreign aid, national income, financial development and deposit rate variables were found to be important in the long run. In the short run, however, only CPI inflation and national income variables were estimated to have significant impact in favor of national saving in the country. Hence, it could be wise to determine the optimum threshold for inflation to control its disfavored behavior with national saving variable. Besides, resources received in the form of aid should be diverted to investment activities rather than keeping them as reserves in the saving account of the government. Keywords Cointegration, ECM, Ethiopia, Gross Saving, Predictors, Unit Root
Natnael Abraham