The purpose of this thesis was to assess the economic implications of an export
promotion policy on poverty reduction and inter-industry growth of Ethiopia. The study was
conducted in four steps. The first and the second steps involved simulation scenarios. Scenario 1
simulated the change in the incidence of poverty when FDI capital was selectively introduced
into non-coffee export agriculture. Scenario 2 simulated a situation in which the coffee industry
received the same policy treatment as other export agriculture in accessing FDI capital. Step
three analyzed inter-industry growth under the two scenarios. In the fourth step, sensitivity
analysis was conducted to assess the possible outcomes of Scenario 1 and 2 under fluctuations in
world coffee prices and changes in substitution parameters.
A micro-simulated CGE model was constructed to determine optimum production,
income and consumption. A Beta frequency distribution function and FGT poverty measures
were used to examine the changes in three household groups? income distribution and prevalence
of poverty. For these analyses, the National Accounting Matrix and the Household Income and
Expenditure Sample Survey data set were used.