Analysis of Market Performance of Ethiopian Coffee Production (A Time Series Analysis)

Abstract

The aim of this study was to investigate the Ethiopia coffee marketing performance. To examinethis objective, this study considered a time series data from the period of 1985 to 2017 usingOLS estimation with a necessary tests and application. The study used volume of coffee export asa dependent variable, while terms of trade, trade openness, and real gross domestic product areconsidered   as   independent   variables.   The   study   concluded   that   terms   of   trade   and   tradeopenness has a positive and significant impact on volume of coffee export both under the long-run and short-run analysis. Additionally, Error Correction Model (ECM) concluded that realgross   domestic   product   has   insignificant   and   positive   impact   in   the   short   run.   The   policyimplication is that improvement in the quality of coffee export, expansion in domestic productionof coffee, and removing trade constraints are suitable way to provide significant effect on volumeof coffee export

Table of Content

Acknowledgment..............................................................................................................................i

Table of Content..............................................................................................................................ii

List of Table.....................................................................................................................................v

List of Figure..................................................................................................................................vi

Acronyms and Abbreviations........................................................................................................vii

Abstract...........................................................................................................................................ix

CHAPTER ONE

INTRODUCTION...........................................................................................................................1

1.1.Back ground of the study......................................................................................................1

1.2.Statement of the problem..................................................................................................3

1.3. Objective of the study...........................................................................................................4

1.3.1. General objective............................................................................................................4

1.3.2. Specific objectives..........................................................................................................4

1.4. Type of Data, Source and Methodology...............................................................................4

1.5. Significance of the study.......................................................................................................5

1.6. Scope of study.......................................................................................................................5

1.7. Organization of the study......................................................................................................5

1.8. Limitation of the Study.........................................................................................................6

CHAPTER TWO

REVIEW THEORETICAL AND EMPRICAL LITERATURE.....................................................7

2.1. Theoretical literature.............................................................................................................7

2.1.1. Origin and History of coffee..........................................................................................7

2.1.2. Definition of coffee (coffee Arabica) and export...........................................................9

2.1.3. The Evolution of Policy on Coffee and Government Assistance...................................9

2.1.4. Ethiopian coffee exporters............................................................................................10

2.1.5. Importance of coffee in the Ethiopian economy..........................................................12

2.2. Empirical review.................................................................................................................12

CHAPTER THREE

METHODOLOGY OF THE STUDY...........................................................................................15

3.1 Type and source of data....................................................................................................15

3.2 Method of data analysis.....................................................................................................15

3.2.1 Descriptive data analysis..............................................................................................15

3.2.2. Econometrics Analysis................................................................................................15

3.3. Methods of Estimation and Procedure: test used................................................................17

3.3.1. Unit-Root test...............................................................................................................17

3.3.2. Co integration...............................................................................................................19

3.3.3. Error Correction Model (ECM)....................................................................................19

3.3.4. Multicolliniarity Test....................................................................................................20

3.3.5. Heteroskedasticity Test................................................................................................20

3.3.6. Autocorrelation Test.....................................................................................................20

CHAPTER FOUR

DESCRIPTIVE AND ECONOMETRIC ANALYSIS.................................................................21

4.1. Descriptive Analysis...........................................................................................................21

4.2. Econometrics Analysis........................................................................................................24

4.2.1. Unit root test of stationarity..........................................................................................24

4.2.2. Co-integration test result..............................................................................................26

4.2.3. Long runs Regression analysis.....................................................................................26

4.2.4. The Short Run Analysis...............................................................................................28

4.2.5. Diagnostic test results...................................................................................................30

CHAPTER FIVE

CONCLUSION AND RECOMMENDATIONS..........................................................................31

5.1. Conclusions.........................................................................................................................31

5.2. Policy Recommendations....................................................................................................32

REFERENCE

APPENDIX