Analyzing the share of agriculture and industrial sectors in the economic growth of ethiopia: an ordinary least squares (ols) application

Author: 
Gemechu Bekana

Ethiopia has great resource potential that may not be available in other countries. It has a great potential of various resources that date back to thousands of years. Ethiopia is one of the areas that have diversity in terms of natural resources and industrial components. This helped increasing the gross domestic product (GDP). Hence, the purpose of this study examines and analyze factors (Agriculture and Industrial Sectors) that affecting economic growth of Ethiopia. Research on agriculture and industrial in Ethiopia reveals strategies and solutions to overcome the obstacles confronting the Ethiopia economy by diversifying the economy. To achieve study objective the Ordinary Least Squares (OLS), multiple regressions _ Double log with economic analysis were applied in the study and the secondary data from 1980 to 2016 was used to estimate the contribution level of economic sectors to economic growth. The empirical result shows that political and security instability had negative effects on the agriculture and industrial sectors as well as on the economic growth. This study also found that both agriculture and industrial sectors had positively effected on gross domestic product (GDP). Nevertheless, the effect of industrial sector was smaller, if compared to agriculture sector. Ethiopian government should give opportunities to extensively develop Agriculture and Industrial sectors and in the process help to increase gross domestic product (GDP). Furthermore, government should consider agriculture and industrial diversification as necessary strategies to develop Ethiopia's economy. This study contributes to the body of knowledge because this study attempts to present a clear picture of the agriculture and industrial sector of Ethiopia. The study also identifies the problems that facing the Ethiopian economy and selects the necessary policy to solve the problems.

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