EDRI Working Paper 017: Why export promotion efforts failed to deliver? Assessment of the export incentives and their implementation in Ethiopia

Abstract

This paper examines the effectiveness of the existing export incentives in reducing the anti-export bias and encouraging exports; both in terms of their sufficiency and implementation related obstacles. We used a qualitative method and triangulated different data sources and interviews with different actors in the sector. The study reveals that the incentives provided for exporters are insufficient to motivate the private sector engage in exports. Firms that produce for domestic market have almost comparable incentives through investment promotion. The additional incentives provided for exporters are, thus, mediocre in comparison not only to the challenges associated with exporting and anti-export bias created by the existing policies but also to the investment incentives that are available for all investors including firms producing for domestic market. More importantly, the study found that the effectiveness of the export incentives is substantially constrained by the lack of efficient export bureaucracy and coordination problem. This has made difficult to ensure exporters have access even to the limited level of export incentives and encouraging diversion and rent seeking by the private sector. All these suggest that overcoming the incentive administration hurdles would reward the government’s effort in promoting export in addition to making the export inventive attractive relative to the investment incentive.