Evaluation Of The Economic Impact Of Bilateral Coffee Trade Between Ethiopia And China

The main objective of the study was to investigate the economic impact of bilateral economic partnership between Ethiopia and china on Ethiopian economy,through Ethiopian coffee export performance to china market.The study employed both descriptive analysis and econometric technique.In particular,the study sets out to assess the trend of Ethiopian coffee export performance to china market and economic growth in Ethiopia using yearly time series data covering from 1990/91 to 2020/21 years.The dependent variable is the real Gross Domestic Product(RGDP)of the country.Explanatory variables namely coffee export to china market values(MXCO),trade openness(TO),real exchange rate(RER)and government expenditure(GEX)were regressed using the Autoregressive Distributed Lag(ARDL)model.Granger causality method was used to test the direction of causality between Ethiopian coffee export and economic growth.The long run results obtained indicated that of Ethiopian coffee export to china market has positive and significant effect on economic growth of Ethiopia.In the short run,of Ethiopian coffee export to china market has significant positive effect on economic growth.The granger causality shows bi-directional relationship between Ethiopian coffee export to china market and economic growth.The Recommendation from the results of the study was that to strengthen bilateral trade partnership with chain and other governments with high potential market to agricultural exports including coffee,to improve the productivity and quality of agricultural export commodities,the government should adopt modern machines and technology,provision of adequate inputs,availability of credit,improved marketing mechanism as well as maintain Agro based industries to export value added goods rather than raw material to increase foreign exchange earning of country.