Will Ethiopia’s Membership in the World Trade Organization (WTO) Enhance Its Total Exports and Real GDP Growth?

Abstract

Using a general equilibrium analysis, this study looks into how Ethiopia’s entry into the World Trade Organisation (WTO) would affect its exports and Real GDP growth. Although there is a theory that supports trade liberalisation through WTO membership, empirical data indicates that the consequences differ greatly across rich and poor countries. The study uses a thorough general equilibrium approach that encompasses both conditional and full endowment scenarios to estimate trade costs and evaluate their effect on Ethiopia’s economy using the General Equilibrium Poisson Pseudo Maximum Likelihood (GEPPML) procedure. The findings suggest that Ethiopia’s Real GDP might increase significantly as a result of WTO membership, with projections indicating an increase of 10.608% in the full endowment scenario and 8.683% in the conditional scenario. In a similar vein, the full and conditional scenarios predict increases in total exports by 2.132% and 0.394%, respectively. These results highlight Ethiopia’s potential transformation upon becoming a WTO member, indicating that substantial economic growth, industrialisation, and enhanced market access could result from inclusion into the international trading system. The finding adds to the continuing discussion about how WTO participation helps emerging economies prosper economically.