Long-Term Gowth Opportunities in Ethiopia

Abstract

The paper attempts to investigate the role of institutions in the long-term growth performance of Ethiopia. In this study, it is hypothesized that the long-term growth of the country, apart from traditional factors of production i.e. capital and labor is largely influenced by institutional factors. To examine this, the study uses a times series data on important variables for the period 1967/68-2002/03, and employed Johansen cointegration analysis. The variables used are, institutional quality indicators, human capital, labor force, capital stock, road network, and rainfall. The findings of the paper support the above stated hypothesis. Institution and physical capital are found to be significant in both the long and short run models while human capital is found important only in the long run.

Ethiopian Journal of Economics Vol. 14 (1) 2005: pp. 27-48