An analysis of factors determining the trade deficit in Ethiopia

The situation in Ethiopia is not different from that of other LDCs. The country apart from being the poorest nation in the world is running a chronic trade deficit. The main reason for such deficit is its commodity concentration that is (exceedingly high depend on agriculture exports, coffee in particular) and geographical market concentration (export and import concentration mainly on Europe, North America and Japan) on the other hand, import of basic goods that are capital goods (Alemayehu, 2011). Basically, there has been no decline in the dependency level of primary commodities and also low performance in the import substitution. This study is intended to analyse the factors that determine the trade deficit in Ethiopia. This study employ secondary data obtained from different institutions such as, Ministry of Finance and Economics Development (MOFED), National Bank of Ethiopia (NBE), Customs Authority and Central Statistics Authority from 1977 to 2016. For general descriptive analysis the study use processed data from international journals, different websites which are related to the study and different publication.