Volume 8, Issue 6, December 2019, Page: 325-338
The Effect of Macroeconomic Variables on Industry Sector Output Growth of Ethiopia
Adisu Abebaw, Department of Economics, College of Business and Economics, Salale University, Fiche, Oromia Region, Ethiopia
Received: Jul. 9, 2019;       Accepted: Jul. 30, 2019;       Published: Sep. 20, 2019
DOI: 10.11648/j.ijber.20190806.11      View  36      Downloads  31
Industrialization plays a key role in the process of a nation’s economic development. The experience of the developed world revealed that industrialization significantly increased their productivity and changed the economic structure. Mainly with the context of reoccurring unstable macroeconomic performance in Ethiopia, analyzing the effect of macroeconomic variables on industry sector output growth is a proper way to design suitable industrial policies. Therefore, this study aimed to examine the effect of some macro-economic variables on the industry output growth in Ethiopia. To do so the study used a time series data ranging from 1991 up to 2018 from Ministry of Finance and Economic Cooperation of Ethiopia. The study also used Augmented Dickey-Fuller (ADF) and the Phillip-Perron (PP) unit root tests of stationary, Auto Regressive Distributed Lag (ARDL) bound test to co-integration and error correction model. Accordingly the study confirmed the existence of a long-run relationship between industrial output growth and macroeconomic variables. Macroeconomic variables such as, lending rate, inflation rate and trade balance found to be affecting the industrial sector output growth negatively, positively and negatively, respectively in the long run. Therefore, the government has to keep lending rate to the level that could be amenable for firms and maintaining the trade balance; via manipulating the export and import.
Bound Test, Industrial Output, Macroeconomic Variables, Lending Rate
To cite this article
Adisu Abebaw, The Effect of Macroeconomic Variables on Industry Sector Output Growth of Ethiopia, International Journal of Business and Economics Research. Vol. 8, No. 6, 2019, pp. 325-338. doi: 10.11648/j.ijber.20190806.11
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