Determinants of Export Performances of Major Spices (Turmeric and Korarima) in Ethiopia

Abstract

Background: Ethiopia has comparative advantages in the production of exportable spices due to existing rich genetic resources, diverse agro-ecological condition and abundant arable land and labour. However, despite their high potential and opportunities for export, most spices including turmeric and korarima are not fully utilized.
Objective: This study was intended to analyze the determinants of export performance of major spices (turmeric and Korarima) in Ethiopia.
Material and Methods: The random effect GLS gravity model was selected as an analytical tool to estimate the determinant of major spices export performance between Ethiopia and nine sampled spices trade partners using annual panel data collected for a period of 2005 to 2015/2016.
Results: The results indicated that Ethiopia's population, foreign direct investment, real exchange rate and institutional quality, the importers' GDP, GDP per capita and population, geographical distance and the dummy variables (COMESA membership and sharing common borders) had significantly affected turmeric and Korarima export performances, at different level of significance level, with their expected sign or effect. However, the variables intuitional quality and being COMESA membership were found to have unexpected negative influences on the export performance of major spices (turmeric and Korarima).
Conclusion: The finding of the study implied that there is a need to formulate policies and strategies that would promote institutional quality, improve supply capacity, attracting foreign direct investment, strengthen trade liberalization, deepening economic integration and targeting export destination that could reduce transportation costs in order to improve the export performance of those spices.