Causality and forecasting dynamics of food security and economic growth in Ethiopia

This study examines the relationship and causality between food security and economic growth in Ethiopia. It employs a Vector Error Correction (VEC) modeling, the Wald test, impulse response functions (IRFs), Johansen cointegration analysis, and forecasting techniques. The dataset spans from 2000 to 2023 and is drawn from the World Bank’s World Development Indicators (WDI) and the Food and Agriculture Organization (FAOSTAT). Both pre- and post-estimation procedures were conducted to ensure robustness and validity. Missing values were addressed through interpolation, while extrapolation was applied for forecasting purposes. The Johansen cointegration test confirms the existence of a statistically significant long-run equilibrium relationship between food security and economic growth. Short-run results reveal significant bidirectional effects, with economic growth positively influencing food security by 35.31 kcal/capita/day, and food security also exerting a positive impact on economic growth by 0.013%, while the error correction terms confirm convergence toward the long-run equilibrium. The long-run elasticity estimate indicates that a 1% increase in GDP per capita increases food security by approximately 73 kcal/capita/day. The Wald test further supports bidirectional causality, and the IRFs show that shocks to economic growth have a positive but transitory effect on food security. Forecasting results project a gradual upward trend in food security over the next decade, whereas economic growth is expected to moderate. These findings underscore the importance of policies aimed at infrastructure development, climate resilience, yield gap reduction, human capital formation, and technological advancement. However, the study is limited by its reliance on aggregated national-level data and a single proxy for food security.