3 the final draft edited
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3 the final draft edited
1CHAPTER ONE1. Introduction1.1BackgroundLiberalization of the world economy lias brought in seamless adjustments throughout the countries in the world 3 the final draft edited d. The global trade dynamics has affected all the countries both developed and developing reshaping their economic restructuring. The very process of globalization and trade liberalization has also created interdependency of nations to a significant extent. This economic dependence creates economic 3 the final draft edited interrelation among the countries in the world. As a result the role of strong external sector becomes a topical issue for the development of countrie3 the final draft edited
s and economic growth. International trade consists of export and import of goods and services. Countries experienced different trade strategies and p1CHAPTER ONE1. Introduction1.1BackgroundLiberalization of the world economy lias brought in seamless adjustments throughout the countries in the world 3 the final draft edited balance like export orientation or import substitution strategies. Liberalization of Ethiopia along with structural adjustments and slow process of privatization has shown mixed results for the economy.The doctrine of import substitution industrialization trade policies that was pursued by many Afr 3 the final draft edited ican countries during the period from the 1960s to the 1980s began to shift to market-oriented reforms starting from the early 1980s.The major reasons3 the final draft edited
for the shift towards more market-oriented reforms were in response to the economic crises in Africa in late 1970s and early 1980s which were advocat1CHAPTER ONE1. Introduction1.1BackgroundLiberalization of the world economy lias brought in seamless adjustments throughout the countries in the world 3 the final draft edited contain trade liberalization as an integral part had taken different measures to liberalize import and to remove the most export-distorting interventions. (Gidisa. 2010)The structural adjustment programs (SAPs). which most African countries pursued in the 1980 and 1990s. have been supported by incre 3 the final draft edited ased level of grants and credits which, in turn, increased the level of merchandise into these countries. The resultant combination of increased volum3 the final draft edited
e of import and possible decrease in the rate of import taxation has helped to sustain or even increase custom revenue. (Teshome. 2003)2In recent year1CHAPTER ONE1. Introduction1.1BackgroundLiberalization of the world economy lias brought in seamless adjustments throughout the countries in the world 3 the final draft edited of constraint imposed by trade balance. Thus relationship between trade liberalization and trade balance become an important area of study in recent year especially in developing countries like Ethiopia. They began to advocate the promotion of export can be made through import liberalization by amen 3 the final draft edited ding the underlying structure of the economy. (Shafeddin. 2008)The strategy' of trade liberalization have been launched by many of the countries of th3 the final draft edited
e world which classified into three parts (waczicrg 2008) the first groups were Asian countries using their export oriented reform of dynamic trade an1CHAPTER ONE1. Introduction1.1BackgroundLiberalization of the world economy lias brought in seamless adjustments throughout the countries in the world 3 the final draft edited 80 s. The third gloups are composing of Latin American countries which adopted in 1980‘s as a result of the press are of international financial institutions, (shafeedin 2008)The market oriented policy packages, usually referred to as "Stiuctural Adjustment Program (SAP)", which contain trade libera 3 the final draft edited lization as an integral part had taken different measures to liberalize import and to remove the most export-distorting interventions. While about 603 the final draft edited
percent of African countries were undergoing and had undergone through a Structural Adjustment Program by the second half of the 1980s (World Bank, 191CHAPTER ONE1. Introduction1.1BackgroundLiberalization of the world economy lias brought in seamless adjustments throughout the countries in the world 3 the final draft edited mperial period the major policies of external sector were import substitution and protection of infant industry. It tries to promote the growth of endogenous industry' through protection of living import tariff quota different mechanism to protect the competition of imported good items. After 1974 t 3 the final draft edited he military government era was a heavily state managed trading system were occurred. There was an intervention in the transaction of trade activity mo3 the final draft edited
st industries were nationalized currently the country' experience a market oriented liberalized strategy which supported by the international financia1CHAPTER ONE1. Introduction1.1BackgroundLiberalization of the world economy lias brought in seamless adjustments throughout the countries in the world 3 the final draft edited variable trade liberalization is a key in the development favorable trade balance and positive terms of trade.3However this is going to be achieved if there is successfill implementation of macroeconomic policy. When wc see the current condition of most African countries they foil to implement effec 3 the final draft edited tive macroeconomic policy which makes them inefficient use of the trade liberalization.1.2slalcmcnl of the problemMost of least developing countries a3 the final draft edited
re characterized by weak performance of export and high price of import commodity. Tn 1980 Africa’s share of rhe world’s export was only 2.5 percent a1CHAPTER ONE1. Introduction1.1BackgroundLiberalization of the world economy lias brought in seamless adjustments throughout the countries in the world 3 the final draft edited ther drop in the relative shares with the export share down to 1.1 percent and imports 1.0 percent of the respective world totals. I'urlheimorc Africa’s export trade fell at the rates of 0.2 mid 1.8 percent per annum dining the periods 1973-1980 and 1980-1987 respectively. During the same periods th 3 the final draft edited e corresponding export volume growth for the low income group of countries was estimated at 3.5 and4.2 percent per amiurn. Africa's distance from the3 the final draft edited
low income gloup's average continued to widen for the period up to 1990. (Teshome. 1990)The terms of trade too have been unfavorable to Africa’s expor1CHAPTER ONE1. Introduction1.1BackgroundLiberalization of the world economy lias brought in seamless adjustments throughout the countries in the world 3 the final draft edited sub-Saharan Africa. Export volume increases to the desired extent were also not possible due to recurring unfavorable climate and related production constraint. Even if 11 were possible to expand exports Africa's earning would not have increased because of oilsetting price inelasticities of demand 3 the final draft edited foi Afr ica's products. (l eshomc. 1990)Ethiopian economy is one of the least developed countries of the world. Tn the past period there was high trad3 the final draft edited
e restriction on the external sector. Several protection of import made by levied tariff on the imported item Goods; there was also high government in1CHAPTER ONE1. Introduction1.1BackgroundLiberalization of the world economy lias brought in seamless adjustments throughout the countries in the world 3 the final draft edited try' to experience unfavorable terms of trade. Proponents of globalization believe that trade liberalization is the key’ to fight poverty in developing countries (World Bank 2002; WTO 2000; McCulloch. Winters & Cirera 2000). Most of the experts define trade liberalization as the total or part elimin 3 the final draft edited ation of trade barriers such as quotas and tariffs imposed by governments on imported and exported goods (Marchant & Snell 1997).4It is believed that3 the final draft edited
the relaxation of trade barriers will facilitate trades and attract foreign direct investment (FDD which in turn will boost economic growth and ultima1CHAPTER ONE1. Introduction1.1BackgroundLiberalization of the world economy lias brought in seamless adjustments throughout the countries in the world 3 the final draft edited exist. The number of people living on less than one dollar a day has been increasing by almost 50 per cent in the last few years and the gap between rich and poor people in developing countries is widening. UNCTAD (2001) points out that the poorest 49 countries make up 10 per cent of the world popu 3 the final draft edited lation, but accounts for only 0.4 per cent of world trade and this disparity is continuing to grow at an alarming rate.In the year 2000 alone. sub-Sah3 the final draft edited
aran Africa lost nearly ƯSS45 dollars per person thanks to trade liberalization. Most trade liberalization in Africa has been part of the conditions a1CHAPTER ONE1. Introduction1.1BackgroundLiberalization of the world economy lias brought in seamless adjustments throughout the countries in the world 3 the final draft edited rom liberalization only US$20. Africa is losing much more than it gains if aid comes with policy strings attached. The staggering truth is that the USS272 billion liberalization has cost sub-Saharan Africa would have wiped clean the debt of even- country in the region (estimated at USS204 billion) a 3 the final draft edited nd still left more than enough money to pay for every child to be vaccinated and go to school. ( Africa Focus Bulletin. July 5. 2005).In theory, trade3 the final draft edited
liberalization is expected to have a positive influence on the long-term growth of the economy through a more efficient use of resources: increased cGọi ngay
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