Ethiopia and the BRICS: An Assessment of Trade and Investment Flows

Ethiopia is the 83rd largest economy in the globe according to the World Bank figures for 2013. The country is considered to have huge but untapped potentials in the sub-Saharan Africa region as well as one of the attractive investments destinations on the continent. This study therefore examined the investment flows and intensity of trade between Ethiopia and the individual BRICS for the period 1995 to 2011. A striking finding is that not a significant proportion of the BRICS investments in Africa go to Ethiopia. With respect to trade flows, Ethiopia recorded trade deficit with all the BRICS countries in the period under review, while its trade intensity index with all of them was less than one. Arising from these findings a number of relatable policy implications are documented. First, given that Ethiopia is considered as one of the recent success stories in Africa, the BRICS in general and South Africa in particular may explore areas of potential benefits by improving bilateral economic relationship with the country. Second, given that Ethiopia is experiencing massive developments in its infrastructure, South Africa may take advantage to invest in some of the projects. Third, the relatively low trade intensity with Ethiopia means that going forward there are possible areas of opportunities that may exist which may ultimately boost trade flows between Ethiopia and the BRICS