Abstract:
Since the start of economic liberalization, Asia and Africa have been expanding new corridors for South-South trade. India and Ethiopia are the two fastest-growing economies in this region, and the trade between these countries involves many manufacturing goods. This research empirically examines the determinants of manufacturing exports between India and Ethiopia during the post-reform period. The focus is to analyze the role of the real effective exchange rate (REER) in manufacturing exports from 1994 to 1995 to 2015 to 2016.The data were gathered from multiple sources, including UN Comtrade, the RBI annual reports, the Annual Survey of Industries (ASI), Centre for Monitoring Indian Economy (CMIE) Ltd, the Office of the Economic Advisor and the Ministry of Commerce, Government of India. The study employs econometric modeling with ordinary least squares regression to evaluate the determinants of India's manufacturing exports to Ethiopia.Based on statistical and econometric tools, results revealed that the continuous upward trend in Indian manufacturing exports depends mainly on the technology and export prices relative to domestic goods rather than purely external prices indicated through REER. The stability of export growth over time requires more effort to improve the technological efficiency of the manufacturing sector on the supply side.The accuracy and relevance of the findings to current trade dynamics between India and Ethiopia may be limited by the study's timeframe (1994-2015) and data quality.This research is the first to focus on how exchange rates affect India's manufacturing exports to Ethiopia.