Exchange Rate Management and Export Growth: Lessons for Ethiopia

Abstract

This report reviewed some of the literature, focused on experiences in other countries that can be drawn on. The structure of the report is as follow: it starts off with a brief overview of what academic literature says about real exchange rates for low income countries seeking to expand exports, followed by the example of South Korea and of other countries when at early export growth stages that have supported long term strong export and wider economic growth patterns. The impact of shifts in real exchange rates on different sectors is reviewed. Finally, the challenges of shock and associated political economy, as well as impact on taxation is covered, with a conclusion of what this literature review-based report may imply for Ethiopia. K4D helpdesk reports provide summaries of current research, evidence and lessons learned. This report was commissioned by the UK Department for International Development