Seid Y. Hassan

US exports and time-varying volatility of real exchange rate

Abstract The effect of exchange rate volatility on trade is a controversial issue in international economics. Despite a widespread view that an increase in exchange rates volatility reduces trade, there is no real consensus on the direction or the size of the exchange rate volatility–trade level linkages. This paper investigates the relationship between US trade volume and exchange rate volatility using cointegration and error-correction models. We use conditional variances of the real effective exchange rate (REER) series modeled as a generalized autoregressive conditional heteroskedastic (GARCH) process to measure the exchange rate volatility. The cointegration results indicate a significant negative relationship between US export volume and exchange rate volatility. The short-run dynamics of the relationship, however, show that the effects of both real exchange rates and exchange rate volatility are insignificant.

International Business in American MBA Programs—Can We Silence the Critics?

Many criticisms are being leveled against both the teaching and teachers (content and delivery) of international business courses in American MBA programs. Using empirical evidence from 117 professors of international business from all regions of the United States except Hawaii and Alaska, this study found that 75% of them had conducted research and consulted for International companies, and 71% had doctorates in international business (36%), general management (32%) or international economics (3%). Numbers of published articles, on average, compared favorably with those of accounting faculty from another study. Using these and other criteria, we found that overall the international business faculty were qualified to teach global issues.

Explaining the Soaring Ethiopian Real Estate and Property Prices

Admittedly, in all countries of the world, Ethiopia included, the reasons behind rising property prices could be many. In the Ethiopian case, these factors include, among others, demand for and supply of real (estate) assets, rising population and urbanization, the existence of a large number of tenants working for donor communities (NGOs) and multinational institutions, huge influx of money that the diaspora community sends back home (remittances) that largely is poured onto the housing and real estate markets. This article, however, focuses on government policy-driven (infrastructure and service sector-focused) and the corruption fueled aspect of the fast-rising real estate and related property prices. This brief analysis paints the picture why Ethiopia is still an empire-like landed aristocracy (the government apparatchik being replaced by a new oligarchy) but dangerously wrapped with criminality and pyramidal schemes.

Explaining the Ethiopian Outmigration: Incentives or Constraints?

[enterIn both theory and practice, pull and push factors drive migrants out of their own countries of origin. The factors are complex but they are in general categorized as: (a) demand-pull factors, represented by better economic opportunities and jobs in the host (new) country; (b) supply-push factors, represented by poverty, the lack of economic opportunities and prospects, jobs, and economic downturns, political oppressions, abuses of human rights by home country governments, religious intolerance (constraints), war, conflict and insecurity in the home country; (c) mediating factors that accelerate or constrain migration which may include the existence or prevalence of opportunities available to human smugglers, fly by night recruitment agencies, registered recruitment agencies operating within the legal system and government policies encouraging/incentivizing citizens to migrate; and (d) social network (pull) factors such as the existence of relatives, friends and acquaintances in host countries, available opportunities for family unifications in host countries, or when individuals send money to bring other family members to join them into the new (host) country- a chain migration which results in migration fields or clustering of people from a specific countries into certain neighborhoods or small towns in the new (host) countries (e.g. China Town, Vietnamese Town, Ethiopia Town, etc. in North America); this latter at times known as chain migration. And success stories of diaspora migrants and networks. The role played by each of these factors and their relative importance and dynamics depend on the economic, political, societal conditions and geographical proximity between the home, transit and destination countries. In attempting to explain the Ethiopian outmigration, our conjuncture is that the push factors play the dominant role in driving out Ethiopians out of their country, prominent among them being abject poverty and bad governance. Bad governance and economic constraints are indeed highly correlated, for bad governance basically means the lack of rule of law, political freedom, accountability, transparency, efficient institutions and increased corruption and insecurity. Development economists have repeatedly shown that bad governance plays significant roles in retarding development in addition to exacerbating economic inequality, increasing poverty, corruption, conflicts and environmental degradation. Abstract Body]

The State Capture Onset in Ethiopia: Humanitarian Aid and Corruption

The first part of this paper shows that a substantial part of the money that aid agencies gave to feed the 1984-5 Ethiopian famine victims, including those raised by Band Aid were siphoned off by the Tigrayan Peoples’ Liberation Front (TPLF) to buy military weapons. I also use newly found evidences, interviews and testimonials accumulated over many years to show that famine aid scamming by the TPLF had gone beyond using humanitarian aid to purchase military weapons and feed the Front’s red army. I show how humanitarian aid, as a resource in the midst of extreme scarcity, has enriched some quarters, fuelled corruption and intensified and prolonged conflicts among the warring factions of Ethiopia and legitimized the rebel fronts’ operations. Humanitarian aid lured the Fronts, particularly the TPLF, to parade hundreds of thousands of peasants to Sudan, which led to the deaths of tens of thousands of them (due to overcrowding, disease epidemics, lack of regular food supplies, poor water and sanitation problems, and from being exposed to targets for bombing). The documents I examined, the interviews that I conducted and the testimonials I have gathered over many years indicate that the refugees were abused by the TPLF both during their trek to the Ethio-Sudanese border which took 4-6 weeks and within the refugee camps. According to some ex-TPLF veterans, (and their claims to be indirectly proved by the written work of foreign nationals), a good portion of the humanitarian food aid was not made available to the starving peasants of Tigray. Their statements regarding this issue are indirectly corroborated by the field and research work of foreign nationals. By all these three counts, according to them, the TPLF has committed crimes against humanity. The documents I examined and the interviews and testimonials I gathered also indicate that donors and aid agencies knew that the Relief Society of Tigray (REST) was the flip-side of the same coin (that is, the TPLF) and aid agency personnel knew a portion of the humanitarian aid that they were providing was being diverted for military purposes by the Fronts, indicating a violation of the principle of neutrality and impartiality. There are also indications suggesting that the cross-border interventions by donors and aid agencies were against the multilateral agreements such as the Lome conventions (Duffield and Prendergast, 1994). This shows that the provisions and delivery of humanitarian aid have been used to violate and perhaps diminish the sovereignty of Ethiopia. Looked in a different way, a good portion of the humanitarian aid provided by donor countries to the TPLF and other fronts fighting the Derg regime was in part for the advancement of the diplomatic and foreign policy goals as well as political and military tools of donor nations and aid agencies. It may be for this reason why they cared less about how humanitarian aid was spent, abused or pocketed by the rebel forces. The literature that I examined also provides reasons why the abuse of humanitarian aid would be inevitable in conflict ridden countries such as Ethiopia. And most importantly, the evidence gathered have allowed me to inductively test one of my fundamental hypotheses: that humanitarian aid resources were and still are the sources of predation and capture in Ethiopia and that the culture of corruption and political malaise that we observe in today’s Ethiopia is a byproduct of what the TPLF/EPRDF learned and adopted when it was a rebel front and such a culture of corruption was aided and abetted by humanitarian aid.

Devaluation of the Birr - A Layman's Guide

On September 1, 2010, the Central Bank of Ethiopia announced a devaluation of the birr by 20%. With this devaluation measure, the value of the birr has declined by at least 45% since 2008. It is to be recalled that the birr was devalued by at least 10% in October 2008, by 9.9% in July 2009, and by at least 5% in early May/late April 2010. Numerous sources indicate that all devaluations measures are conducted after the macro-economic team chaired by Prime Minister Meles Zenawi makes the decisions to do so.