Department of Economics

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Determinant of Urban Households’ Food Insecurity: The Case of Mekelle City
(Mekelle University, 2025-02-23) Getnet Ashagrie
This study seeks to analyze food insecurity issues by assessing socio-economic factors that impact the food insecurity of households in urban areas of Mekelle City. The analysis was based on survey data gathered from 397 urban households selected using a simple random sampling procedure. Primary and secondary data were used. The data regarding household determinants were analyzed using descriptive statistics and a binary logit model. The survey result showed that about 27.71% and 72.29% of sample respondents were food insecure and secure, respectively. The empirical results estimated using the survey data to identify the determinants of food insecurity among urban households in the study area revealed mixed impressions. Among the variables considered, age of the household head, income of the household, house ownership, and household food expenditure had a statistically significant effect on food insecurity in the study area. This study adds to the literature by contextualizing urban food insecurity within Sen's Entitlement Framework and the Sustainable Livelihoods Framework in post-conflict areas. Most importantly, the study has delivered findings that call for targeted interventions on income diversification, affordable housing, and gender-responsive policies. This is followed by practical recommendations for policymakers, underscoring the need for context-specific approaches to urban food insecurity in conflict-affected areas.
THE ROLE OF MICRO AND SMALL ENTERPRISES IN EMPLOYMENT CREATION AND INCOME GENERATION (A CASE STUDY OF ADI TOWN IN TIGRAY, ETHIOPIA)
(Mekelle University, 2025-02-23) LEGESSE AMBAYE
The general objective of the study was to examine the Role of Micro and Small Enterprises in Employment Creation and Income Generation taking the town of Abiy-Adi as a case study for this study were collected from 327 respondent individuals who where employees and operators of Micro and Small Enterprises. In addition, secondary data were collected from Tigray regional state bureau of Trade, Industry and Transport .primary data was collected using questionnaire and interviews as data collection instruments. Moreover qualitative data was collected using focus group discussion for data analysis; descriptive statistical tools such as tables, frequency distribution, and percentage were used to describe the responses on the role of Micro and Small Enterprises. The study revealed that MSEs significantly contribute to local economic growth, providing approximately 5-23 jobs per enterprise annually and generating average incomes of enterprise between 30, 000-200, 000 Birr. Micro and Small enterprise also empower Women and Youth, addressing poverty and enhancing livelihoods. However, challenges such as limited access to finance and infrastructure hinder their growth. Most of the Micro and Small Enterprises also face constraints during operation and start up time and the major constraints are found to be lack of finance and unavailability of affordable rented houses. Therefore, Micro and Small Enterprises appear to have great contribution in reducing unemployment and in providing income both for firm owners and employees alike. This study implies that expanding access to finance through credit and improving supply of working place need to be implemented in earnest maintain and boost further the employment and income generation potential of micro and small enterprises.
Technical Efficiency of Urban Savings and Credit Co-operative Organizations (SACCOs): A case study of Mekelle city, Tigray.
(Mekelle Univerity, 2025-02-23) G/slassie Kidanu
The efficiency of urban SACCOs is critical for financial inclusion and economic development. This study examines the technical efficiency of urban SACCOs in Mekelle city, Tigrai, using stochastic frontier Analysis (SFA) and a census method covering all SACCOs in the study area. The research aims to assess the efficiency levels of SACCOs, identify factors influencing efficiency, and provide policy recommendations for improving their performance. A quantitative approach was employed, utilizing financial and operational data from SACCOs. The SFA model was applied to estimate efficiency scores, and relevant explanatory variables were analyzed to determine their impact on efficiency. The findings reveal that, on average the SACCOs in the study area were operating efficiently with high level of efficiency difference. Significant number of SACCOs exhibit inefficiencies due to factors such as low members saving mobilization, inadequate managerial capacity, potential challenges with digital banking adoption, suboptimal resource utilization, and regulatory constraints. The results underscore the need for targeted policy interventions, increase member savings, capacity building initiatives, manage administrative expense, and improved governance structures to enhance SACCOs efficiency. Strengthening regulatory frameworks and promoting financial education among SACCOs can further contribute to the sector’s sustainability. The study provides valuable insights for policy makers, SACCO managers, and stakeholders aiming to improve the financial performance of urban SACCOs in Mekelle city.
The Role of Institutions in Economic Growth in Ethiopia: An Empirical Analysis Using the Autoregressive Distributed Lag (ARDL) Model
(Mekelle University, 2025-02-23) Giday Gebrekidan
The main goal of this research was to look at institution’s role in the performance of Ethiopian economy which is considered an underdeveloped economy. For this purpose the ARDL bounds testing approach to cointegration proposed by Pesaran et al. (2001) and updated with Kripfganz and Schneider (2020) critical values and approximate p-values was used. The short-run and long-run correlations between institutional and other macroeconomic and control variables over the period 1982-2022 were investigated. It made use of secondary data obtained from the World Bank’s World Development Indicators (WDI) for the macroeconomic and control variables and it used Freedom House’s Political Freedom Index for the institutional variable. In case of variables where the WDI has gaps other supplementary sources were used such as the YCharts, Federal Reserve Bank of St. Louis and the National Bank of Ethiopia. The empirical result obtained for the Ethiopian economy suggests the institutional variable takes the lion’s share in its impact on the economy and implies that once the institutional dynamics is introduced in the model the other macroeconomic variables loss their predictive powers.
DETERMINANTS OF MARKET PARTICIPATION OF SMALL SCALE DAIRY FARMERS: THE CASE OF MEKELLE CITY
(Mekelle University, 2025-03-01) RAHEL GEBREYESUS HAILU
This study aimed to investigate the factors influencing market participation among small-scale dairy farmers in Mekelle city, focusing on demographic features, farm characteristics, access to services and infrastructure, credit availability, training programs, and access to information. A quantitative research design was employed, using a survey to collect data from 214 dairy farmers in urban area. The study utilized descriptive statistics and binary logistic regression analysis to identify key factors affecting market participation. The results revealed that farm ownership, access to essential services, credit access and availability of market had a significant positive impact on farmers' participation in dairy markets. Unexpectedly, participation in training programs was found to be negatively affecting market engagement. The study concluded that improving land ownership issues, access services and to credit, and timely market information would enhance market participation among dairy farmers. Policy recommendations included developing tailored financial service for smallholder farmers and improving access to market information. Future research could further explore the role of training on market participation of dairy farming.
Investigating the Impacts of Urban Poultry Farming on Household Welfare using Propensity Score Matching Technique: A Case Study of Shire Town in Northern Tigray Region, Ethiopia
(Mekelle University, 2025-07-25) Goyteom G/her
This study examines the socioeconomic and nutritional impacts of urban poultry farming on household welfare in Shire Town, Tigray, Ethiopia. Using a mixed-methods approach, it combines quantitative data from 306 household surveys with qualitative insights from focus group discussions and key informant interviews. Analytical methods such as Propensity Score Matching and logit regression were applied to assess the causal effects of poultry farming on income, dietary diversity, health, and education outcomes. The results show that urban poultry farming significantly boosts household income, which supports essential expenditures like food, healthcare, and education. Poultry-farming households demonstrated better dietary diversity and more frequent consumption of protein-rich foods, along with improved health status and reduced medical costs. Educationally, these households had higher school enrollment rates and faced fewer financial barriers. Despite these benefits, challenges, including high feed costs, disease outbreaks, limited veterinary services, and market access constraints, affect productivity and growth. The study highlights urban poultry farming’s role as a sustainable livelihood strategy and recommends improvements in veterinary care, feed affordability, market infrastructure, and supportive urban policies, with suggestions for further research on health impacts and gender dynamics.
The Impact of Foreign Direct Investment on Poverty Reduction in Ethiopia: A Cointegrated VAR Approach
(Mekelle University, 2025-08-23) Shishay Tsehaye
This study investigates the impact of Foreign Direct Investment on poverty reduction in Ethiopia over the period 1990 to 2023, employing a Cointegrated Vector Autoregressive model. The primary objective is to examine both the long-run and short-run dynamics between Foreign Direct Investment inflows and poverty, proxied by real Gross Domestic Product per capita, while controlling for trade openness, government expenditure, inflation, infrastructure development, and education expenditure. The research uses annual secondary data sourced from the World Bank, the United Nations Conference on Trade and Development, the National Bank of Ethiopia, and the Ethiopian Investment Commission. Stationarity was tested using the Augmented Dickey-Fuller and Phillips-Perron methods, followed by optimal lag selection based on the Akaike Information Criterion, the Schwarz Bayesian Criterion, and the Hannan-Quinn Criterion. Johansen cointegration analysis confirmed the existence of two long-run equilibrium relationships among the variables, leading to the estimation of a Vector Error Correction Model. The empirical findings reveal a positive and statistically significant long-run effect of Foreign Direct Investment on real Gross Domestic Product per capita, indicating that sustained Foreign Direct Investment inflows contribute to improved living standards and poverty reduction. Infrastructure and education spending were also found to enhance the poverty-reducing effects of Foreign Direct Investment, while inflation exerted a negative impact. Short-run effects of Foreign Direct Investment on poverty reduction were positive but smaller in magnitude, with the error correction term indicating a thirty-seven percent annual adjustment toward long-run equilibrium. Granger causality tests confirmed unidirectional causality from Foreign Direct Investment to poverty reduction. Variance decomposition and impulse response functions further underscored the importance of Foreign Direct Investment in explaining changes in living standards over time. The study concludes that Foreign Direct Investment plays a significant role in poverty reduction in Ethiopia when supported by investments in infrastructure and human capital, alongside macroeconomic stability. Policy recommendations include strengthening the investment climate, targeting Foreign Direct Investment toward labor-intensive and pro-poor sectors, expanding infrastructure, improving education and vocational training, and ensuring macroeconomic stability. These findings provide both academic and policy relevance, offering evidence-based guidance for maximizing the developmental benefits of Foreign Direct Investment in Ethiopia.
The Determinants of Institutional Credit Access of Smallholder Farmers in woreda Raya Alamta. Southern zone of Tigray, Northern Ethiopia
(Mekelle University, 2025-08-25) Muleta Amare
This study aimed to analyse the determinants of access to formal credit by smallholder farmers in Raya Alamata Woreda. Preferences of smallholder farmers towards financial credits was scored and ranked, sources of financial credit for smallholder farmers were assessed and factors affecting formal credit access of small holder farmers were analysed and identified in the study areas. A stratified random sampling procedures were employed to select three rural Kebele administrations and 167 farm household heads were selected using probability proportional to size. Semi-structured interviews were employed for collecting quantitative data from the sampled farm households in the study area. Three Focus group discussion, fifteen key informants’ interview and field observations were held to generate qualitative data. Ranking techniques of credit sources were applied to know the preferences of all respondents and focus group participants for credit sources. Descriptive statistics and binary logit model were employed for analysing the quantitative data. STATA version 14 was used for data analysis. The results of the study were indicated that, out of 167 respondent house hold heads, 74 of the sampled farm households were formal credit users, whereas the remaining 93 of the respondents were non-users. Relatives, friends and neighbours were preferred as the best credit source for borrowers in the study area than other sources due to its interest free, low transaction cost and adjustments of repayment time. In the study areas, access to formal credit services of smallholder farmers was limited due to some-times inconvenience of group lending in which group members took responsibility of paying the defaulters risk, high interest rate charged on borrowers and some respondents having external financial supports. But, the logit model results reveal that sex of household heads, attitudes of household heads towards credit risks, preference of household heads for group lending, age of the household heads and experience of the household heads in credit using are important factors significantly affecting access to formal credit by smallholder farmers.
IMPACT OF SMALL-SCALE IRRIGATION TECHNOLOGY ON FARM HOUSEHOLD WELFARE IN TAHTAY MAYCHEW WEREDA, TIGRAY REGION, NORTH ETHIOPIA
(Mekelle University, 2025-08-25) ALEMSHET YIHDEGO
Methodology: This study investigates the impact of small-scale irrigation technology (SSIT) on farm household welfare in Tahtay Maychew Wereda, Tigray Region, North Ethiopia, focusing on three kebeles Hadi Shadi, May Sye, and May Berazyo with a combined population of 24,640. Despite the increasing adoption of SSIT, empirical evidence on its socio-economic and genderrelated impacts in this drought-prone region remains limited. Employing a mixed methods approach, the study surveyed 200 households (150 SSIT adopters and 50 non-adopters), complemented by focus group discussions and key informant interviews. Quantitative analysis utilized descriptive statistics, Probit regression, and Propensity Score Matching to assess impacts on income, food security, and women’s empowerment. Results: Findings reveal that SSIT adoption significantly enhances household welfare, increasing annual income by 78% (32,400 ETB vs. 18,200 ETB), improving dietary diversity, reducing food shortages (24% vs. 62%), and boosting women’s decision-making and income control (empowerment index: 0.58 vs. 0.32). Adoption is driven by education, landholding size, and access to extension and credit services, though challenges like seasonal water shortages (52%), equipment scarcity (43%), and labor demands (37%) persist. Conclusion: The study concludes that SSIT is a transformative tool for rural livelihoods and gender equity but requires stronger institutional support and infrastructure to ensure sustainability. Recommendations include expanding extension services, subsidizing equipment, and improving water management to maximize SSIT’s impact.
THE DETERMINANTS OF ADOPTION OF IMPROVED MAIZE VARIETY IN KOLA TENBEN DISTRICT, CENRAL ZONE TIGRAY, ETHIOPIA
(Mekelle University, 2025-09) Ataklti K/mariam
In most of the world’s poorest countries and especially, those in Africa, agriculture contributes to offer the leading sources of employment and to contribute large fraction of national income. In many of these countries, however, agricultural productivity is extremely low. Maize plays a major role in the livelihood and food security of most small holder farmers in Africa. Adoption of improved maize varieties in agricultural production is considered as one of the most promising ways to ensure food security and alleviate poverty in Ethiopia. However, the adoption and dissemination of these varieties were constrained by various factors. This study was aimed at identifying the factors that influence adoption and adoption of improved maize varieties in kola Tenben District of Central Zone, Tigray. Cross-sectional household level data were collected during the 2024/25 production year from 137 randomly selected sample household and used for the study. Both descriptive statistics and econometric model were used to analyze the data. The result of descriptive statistics indicated, existence of significant mean and proportion differences between adopters and non-adopters in terms of age of the household head, family size, educational level of the household head, frequency of contact with extension agent, access to fertilizer, number of oxen owned and radio ownership. From seven explanatory variables included in the model, four variables (frequency of contact with extension agent, access to fertilizer, number of oxen owned and radio ownership) were the important variables which had positively and significantly influenced adoption and adoption of improved maize varieties. Based on the findings, the following recommendations were forwarded. Policy and development intervention should give emphasis to the improvement of institutional support system by strengthening the existing agricultural extension system, providing the required fertilizes and agricultural training on time, expanding the distribution of radio program and expanding access to credit for the purchase of oxen and other inputs to achieve the target of adoption of improved maize varieties for increasing the production and productivity of smallholder farmers in Kola Tenben district.
The nexus between energy poverty and food poverty: Empirical evidence within Wereda Laelay Maychew Central Zone of Tigray region
(Mekelle University, 2025-09-23) Zemichael G/yohans
This study rigorously quantifies the causal effect of household energy poverty on the severity of food insecurity in Wereda Laelay Maychew, Central Zone of Tigray, addressing the critical methodological challenge of endogeneity present in previous correlation-based studies. The research employed a two-stage Control Function Approach (CFA), using geographic distance to the electricity grid as a valid instrumental variable. This allowed for unconfounded estimation of the impact on the Household Food Insecurity Access Score (HFIA_Score_27), a continuous count variable, via a corrected Poisson regression model. The formal endogeneity test conclusively validated the necessity of the CFA correction (P<0.001). The corrected estimates established a robust, positive, and highly significant causal relationship. Specifically, the Average Marginal Effect (AME) revealed that being classified as energy poor causes the expected HFIA_Score_27 to increase by an average of 15.72 units (P<0.001). This strong quantitative evidence moves beyond mere association, establishing energy poverty as a fundamental structural determinant that significantly compromises food security. The findings necessitate an integrated policy framework prioritizing substantial investment in clean, affordable household energy access as an essential strategy for sustainable reductions in food insecurity.
Cost-Effectiveness Analysis of Fertilizer Input on Sorghum Productivity in Tahtay Adyabo, northwester Tigrai
(Mekelle University, 2025-09-23) Surafeal Gerezghir
This study evaluates the cost-effectiveness of various fertilizer inputs on sorghum productivity in Sheraro, Northwestern Tigray. Sorghum (Sorghum bicolor) plays a vital role in Ethiopian agriculture, serving as a staple food and a key source of income for many households. Utilizing a mixed-methods approach, this research examines the impact of different types of fertilizers organic, inorganic, and blended on yield outcomes, economic viability, and soil health. Key findings indicate that nitrogen-based fertilizers are predominantly used among farmers, yet a significant interest in organic options is emerging. The economic analysis reveals that integrated nutrient management practices can enhance productivity while promoting sustainability. This study provides practical recommendations for farmers, aiming to improve their fertilizer use efficiency and inform agricultural policy decisions. By addressing the gaps in knowledge regarding fertilizer effectiveness and its economic implications, this research contributes to the ongoing efforts to enhance agricultural productivity and food security in Ethiopia.
Specialization: (Development Policy Analysis) A Research on Household Economic (Income, Expenditure, and Welfare) Impacts of Dairy Farming in Adwa City, central Zone, Tigray Region,
(Mekelle University, 2025-09-25) Hager Takele
This study investigates the household economic (income, expenditure, and welfare) impacts of dairy farming in Adwa City, Central Zone, Tigray Region, Ethiopia. Using a mixed-methods design, both quantitative and qualitative data were collected through household surveys, focus group discussions (FGDs), and key informant interviews (KIIs). A stratified random sampling technique was employed to select 370 respondents, comprising 115 dairy-farming and 250 non-dairy households, along with 5 key informants. Quantitative data were analyzed using Propensity Score Matching (PSM) and quantile regression, while qualitative data were examined through thematic analysis. The findings reveal that dairy farming significantly enhances household income, increases expenditure on education and healthcare, and improves dietary diversity and nutritional outcomes. These benefits are particularly notable among low-income households, indicating the pro-poor potential of dairy-based livelihoods. However, the study also identifies structural challenges such as limited access to quality feed, veterinary services, and market infrastructure. It concludes that strengthening institutional support, promoting gender-responsive programs, and investing in value addition are essential to maximize the contribution of dairy farming to sustainable household welfare and post-conflict economic recovery in Adwa and similar settings.
THE EFFECT OF SMALL SCALE IRRIGATION ON HOUSEHOLD INCOME AND FOOD SECURITY (IN CASE OF LAELAY LEGOMTY, WEREDA ADWA)
(Mekelle University, 2025-09-25) GebretsadkanTetemkeGebray
Shortage in amount and variability in trends of rainfall, and crop failure are serious problems indeveloping countries like Ethiopia and in Weredaadwa in particular. Small- scale irrigationactivities has been implemented by the rural households as a means of increasing productivity byreducing crop failure associated with erratic rain fed agriculture and ensuring smallholderfarmers income though improving their production. This study was conducted to estimate theeffect of small-scale irrigation of rural households’ income and food security in LaelayLegomtyweredaadwa. In order toachieve the objective, primary data was collected in the way of questionnaire survey, groupdiscussion and key informant interviews in sample kebeles, and systematically andrandomly selected 60 irrigation users and 60 non- users rural households. The propensityscore matching technique was used to reduce the possibility of bias due to unobserved factors.Logit regression model and OLS model was used to estimate propensity score and to identify determinants ofrural households’ user in irrigation effects on income and food ecurity of the household in the rural area. The average user effect of smallscale irrigation on theincome of the rural households was identified by using the nearest-of non user of irrigation. Estimated outcome variable was statistically significant at 1% level of significanceand insensitive to unobserved factors. Irrigation user rural households in the area improvedtheir income by Birr 250,466 than non- users. Thus, the study concluded that user in small-scaleirrigation has significant positive effect on rural households’ income and food security of irrigation users in the area. The result revealed that user in small-scale irrigation was significantly and positivelyaffected by age, educational level of the household head, active family labor,familysize,land holding, credit access , livestock ownership of the household and market information services. Butsignificantly and negatively affected by extension services of the household head.
Unraveling the Cost of War: Estimating the Effect of War Damage on Household's Food and Nutrition Securely in Tigray, Ethiopia
(Mekelle University, 2025-10-23) Mulugeta Kassie
This study investigates the long-term impacts of asset damage resulting from the 2020–2022 Tigray conflict on household food insecurity and dietary diversity in Ethiopia's Tigray region, utilizing a sample of 400 households from the Samre and Bora districts. Employing an instrumental variable (IV) approach with a control function to address endogeneity—using distance to enemy entry gates and neighbor exposure as instruments—the research establishes a causal link between war-induced asset loss and deteriorating nutritional outcomes. Descriptive statistics reveal significant disparities: the "Damage Group" (49.25%, N=197) exhibits younger heads (42.26 years vs. 48.03), higher male headship (76.6% vs. 67.5%), lower education (6.274 vs. 7.517 years), and smaller landholdings (0.563 vs. 0.653 hectares) compared to the "Safe Group" (50.75%, N=203). Critically, only 7.9% of damaged households are food secure (vs. 47.2%), with 73.4% severely insecure (vs. 46.7%), and dietary diversity is markedly lower, with 46.8% in low diversity (vs. 26.4%) and just 6.4% in high diversity (vs. 35.0%). Empirical analysis, grounded in ordered probit and Poisson regressions, confirms these disparities. For food insecurity, asset damage increases the latent severity by 0.703 units (p<0.001), reducing food security probability by 21% and raising severe insecurity by 22.8%, with a 19.3% higher insecurity score (IRR=1.199, p<0.1). For dietary diversity, it decreases the latent variable by 0.928 units (p<0.001), increasing low diversity by 31.8% and reducing high diversity by 30%, with a 37.7% lower Household Dietary Diversity Score (IRR=0.623, p<0.01). Covariates like age, family size, and education modulate these effects, while strong error correlations (ρ=-0.932 for insecurity, ρ=0.958 for diversity) validate the endogeneity correction. The robust instruments—distance (negative, p<0.01) and neighbor exposure (positive, p<0.001)—support causal inference, reflecting conflict proximity and spillover dynamics. These findings underscore a vicious cycle of poverty and malnutrition, with asset destruction eroding productive capacity and resilience, particularly among targeted younger households. The study’s implications extend beyond Tigray, offering evidence for targeted asset restoration, human capital enhancement, and inclusive growth strategies in post-conflict settings. Future research should explore longitudinal recovery, gender-specific impacts, and policy interventions like cash transfers to inform sustainable recovery efforts. Conducted as of May 2025, this analysis provides a critical foundation for addressing Ethiopia’s fragile agrarian vulnerabilities amid ongoing conflict legacies
Adoption of Modern Agricultural Technologies in Urban Agriculture: A Case Study in Abiy-Adi town -Vegetable Growers
(Mekelle University, 2025-10-23) Teame Gebreyosus
Modern agricultural technology plays a vital role in enhancing farmers' productivity and promoting sustainable farming practices. This study investigates the determinants influencing the adoption of fertilizer and pesticide in urban agricultural farming. A total of 240 respondents were surveyed using both primary and secondary data sources. The collected data were analyzed through descriptive statistics and Econometric models. Specifically, a Logit model was employed to identify the determinants of adoption, while propensity score matching (PSM) was used to assess the impact of adoption on household income. The results reveal that age, gender, farming experience, attitude, perception of cost toward modern technology, extension support, use of organic manure, and scarcity of irrigation water are significant factors affecting adoption decisions. Among these, age, attitude, and use of organic manure were found to have a negative relationship with adoption. Moreover, the adoption of modern agricultural technologies has a significant positive impact on farmers' income. The findings indicate that the average treatment effect (ATE) of adoption on household income is 262,519 birr, while the average treatment effect on the treated (ATT) is 61,578 birr. The higher ATE compared to the ATT suggests that non-adopters could potentially gain even more income benefits if they adopted modern agricultural technologies. This implies that adopters may not yet be fully optimizing the use of fertilizer and pesticides, possibly due to limited experience, inadequate training, or resource constraints. In contrast, non-adopters have a higher untapped potential for income improvement once barriers to adoption are addressed. To bridge this gap, policy interventions should focus on strengthening agricultural extension and capacity-building programs to ensure effective and efficient use of modern technologies. Tailored training and demonstration programs should be introduced to improve farmers' technical knowledge and management practices. Additionally, enhancing access to affordable inputs through subsidies, credit schemes, or cooperative purchasing, along with improving irrigation infrastructure, can encourage wider adoption and help farmers maximize the income potential indicated by the ATE. These measures would contribute to more equitable and sustainable income growth among urban farmers,
WHAT DETERMINES THE GROWTH OF SMALL AND MEDIUM SCALE INDUSTRIES: ADYNAMIC PANEL STUDY Evidence from Northern Part of Ethiopia (Tigray Region)
(Mekelle University, 2025-10-25) Mulubrhan Hailemariam Alemayehu
This study examines what determines the growth of small and medium sized firms (SMEs) in Ethiopian manufacturing industry particularly in Northern part of the country. The study uses dynamic panel data and System GMM estimation to control for the effect of unobserved heterogeneity and endogeneity in the firm growth-size relationship. The study attempted to address the potential problem of endogeneity and unobserved firm’s heterogeneity using System GMM. It also addresses the statistical concerns in growth-size models such as sample selection bias and regression fallacy using OLS. The empirical results show that size is inversely related to firm growth, implying that smaller firms grow faster than larger firms. The growth and size relationship is robust irrespective of the change in firm size and age coverage as well use alternative growth model and regression to the mean. Thus, Gibrat’s Law is decisively refuted. Both the labor productivity and skill affect firm’s employment and out-put growth with robust level of significance, and thus entails skill engenders efficiency and it eventually brings productivity. Capital influences growth rate positive when it is working capital, and negative while fixed capital. The negative relationship between capital deepening and growth rate suggest that either the SMEs substitutes capital for labor or produces under capacity in terms of employment and added value growth model respectively. The two growth models, employment and added value, brings the same results except slight magnitude differences. Hence, firms are higher elastic for out-put growth than employment growth for their size and availability of liquid asset. From policy perspective, Government’s policy making efforts in combating the poverty, the unemployment and stimulating income generation should be reinforced by promotion of firms which grow faster (small firms) as those will contribute more to employment generation and added value.
unraveling the Cost of War: Estimating the Effect of War Damage on Household's Food and Nutrition Securely in Tigray, Ethiopia.
(Mekelle University, 2025-10-25) Mulugeta Kassie Agezew
This study investigates the long-term impacts of asset damage resulting from the 2020–2022 Tigray conflict on household food insecurity and dietary diversity in Ethiopia's Tigray region, utilizing a sample of 400 households from the Samre and Bora districts. Employing an instrumental variable (IV) approach with a control function to address endogeneity—using distance to enemy entry gates and neighbor exposure as instruments—the research establishes a causal link between war-induced asset loss and deteriorating nutritional outcomes. Descriptive statistics reveal significant disparities: the "Damage Group" (49.25%, N=197) exhibits younger heads (42.26 years vs. 48.03), higher male headship (76.6% vs. 67.5%), lower education (6.274 vs. 7.517 years), and smaller landholdings (0.563 vs. 0.653 hectares) compared to the "Safe Group" (50.75%, N=203). Critically, only 7.9% of damaged households are food secure (vs. 47.2%), with 73.4% severely insecure (vs. 46.7%), and dietary diversity is markedly lower, with 46.8% in low diversity (vs. 26.4%) and just 6.4% in high diversity (vs. 35.0%). Empirical analysis, grounded in ordered probit and Poisson regressions, confirms these disparities. For food insecurity, asset damage increases the latent severity by 0.703 units (p<0.001), reducing food security probability by 21% and raising severe insecurity by 22.8%, with a 19.3% higher insecurity score (IRR=1.199, p<0.1). For dietary diversity, it decreases the latent variable by 0.928 units (p<0.001), increasing low diversity by 31.8% and reducing high diversity by 30%, with a 37.7% lower Household Dietary Diversity Score (IRR=0.623, p<0.01). Covariates like age, family size, and education modulate these effects, while strong error correlations (ρ=-0.932 for insecurity, ρ=0.958 for diversity) validate the endogeneity correction. The robust instruments—distance (negative, p<0.01) and neighbor exposure (positive, p<0.001)—support causal inference, reflecting conflict proximity and spillover dynamics. These findings underscore a vicious cycle of poverty and malnutrition, with asset destruction eroding productive capacity and resilience, particularly among targeted younger households. The study’s implications extend beyond Tigray, offering evidence for targeted asset restoration, human capital enhancement, and inclusive growth strategies in post-conflict settings. Future research should explore longitudinal recovery, gender-specific impacts, and policy interventions like cash transfers to inform sustainable recovery efforts. Conducted as of May 2025, this analysis provides a critical foundation for addressing Ethiopia’s fragile agrarian vulnerabilities amid ongoing conflict legacies
Determinants and Trend Analysis of Profitability of EFFORT Companies; Economic Performance Analysis in case of Tigrai:
(Mekelle University, 2025-10-25) Gebrehiwet Romha
The purpose of the study was to examine what determines profitability, its trend healthiness and to extent that war caused profitability to shift down in EFFORT companies in the Tigrai Region, Ethiopia. Using an unbalanced dataset of 16 companies selected from 17 total companies based on data availability criteria, a census sample design of company-level secondary data were collected between 2010 and 2024 and analyzed using the generalized method of moments (GMM) technique, specifically the system GMM estimator. Unlike existing studies that adopted inappropriate models and misusage of LDPD models, this study properly used the standard step-by-step analysis of the LDPD models for the identification of determinants; and the panel data trends as well as DID models for the trend analysis and war effect estimation of EFFORT companies’ profitability, respectively. Having passed all the basic tests, the persistent LDPD model becomes jointly and strongly significant. The empirical results show that lagged profitability, cost efficiency, managerial efficiency, working capital and market competition are the significant EFFORT-level major determinants of profitability in Tigrai. However, the roles of liquidity, company growth, and capital intensity variables were not validated by this study. In addition, these companies have been experiencing inconsistent and fluctuating profitability trends over the same time range. Similarly, the Tigrai war experienced a very huge negative shift and downtrending effect on profitability during the war period. Thus, these findings implied that EFFORT companies have had serious and significant efficiency gap in resource utilizations and cost management, which in turn affects the economic performance of Tigrai Region. This study has also summary policy implications that EFFORT corporate should focus on maximizing innovation efficiency and productivity by relocating resources to more productive performers. Besides, as current profitability largely depends on contemporaneous capacities and efforts, EFFORT leadership needs to give attention to continuous reforms like freeing these companies from political intervention, letting them focus on business agendas only, and thereby improving the unhealthy profitability trends.
THE IMPACTS OF URBAN AGRICULTURE ON POVERTY REDUCTION IN AKSUM TOWN, CENTRAL ZONE OF TIGRAY, NORTHERN ETHIOPIA
(Mekelle University, 2025-10-25) ATSBEHA GEBRESLASIE
This study examines the impacts of urban agriculture on poverty reduction in Aksum Town, located in the Central Zone of Tigray, Northern Ethiopia. As urban poverty continues to challenge local livelihoods, urban agriculture has emerged as a potential strategy for enhancing household income, food security, and employment. The study employed, methods, approaches, incorporating quantitative data from a sample of 300 households drawn from three kebeles. Descriptive statistics and Propensity Score Matching (PSM) were used to evaluate the socio-economic benefits associated with urban farming. The findings indicate that households engaged in urban agriculture experience significantly higher income levels, better food availability, and improved resilience compared to non-participating households. Key urban farming activities include vegetable cultivation, poultry rearing, fruit tree planting, and small-scale livestock production. These activities not only supplement household food consumption but also generate marketable surplus, creating additional income streams. Moreover, urban agriculture contributes to urban dwellers employment in the town. The study concludes that urban agriculture serves as a viable poverty reduction strategy in Aksum town by improving livelihoods, promoting food self-sufficiency, and strengthening social and economic stability. It recommends that local authorities and development partners integrate urban agriculture into urban planning and provide technical and financial support to enhance its effectiveness and sustainability.