Ethiopia and BRICS: A Bilateral Trade Analysis

Image: BRICS flags25

This paper examines the strength, magnitude and direction of bilateral trade between Ethiopia and Brazil, Russia, India, China and South Africa (the BRICS countries) in 1995–2012.

The data shows a drastic increase in trade between Ethiopia and BRICS, largely accounted for by China and India. A trade intensity analysis shows that BRICS countries are becoming increasingly important trading partners to Ethiopia, especially as sources of Ethiopia’s imports. Ethiopia mainly exports crude materials and food and live animals, although there are signs of a gradual diversification towards manufactured goods (predominantly leather goods).

Despite this, Ethiopia’s current trade relations with BRICS reflect a typical North–South pattern, with its major imports comprising manufactured goods, machinery and transport equipment, and major exports mainly comprising primary products. The findings suggest that Ethiopia has a window of opportunity for transforming its economy and diversifying its exports by strengthening its trade relations with BRICS. Specifically, more intensive trade with BRICS will provide it with an opportunity to exploit its natural resources and use the proceeds to develop value chains in other commodity lines, thus applying lessons learnt from the leather industry.