International Journal of Scientific and Research Publications, Volume 6, Issue 3, March 2016 194 ISSN 2250-3153 www.ijsrp.org Drivers of Ethiopian Economic Growth: A Systematic Review Muhdin Muhammedhussen Batu Department of Economics, Jimma University, Ethiopia Abstract- The main focus of this review is to identify the major drivers of Ethiopian Economic Growth. A deep literature review was done on 12 papers conducted in Ethiopia between year 2011 and 2015. The review result shows that Economic growth, as measured by GDP, is highly and positively influenced by human capital investment and export in both short and long run. In the same token, public expenditure (for productive sector), private investment, real exchange rate and household consumption are also important in determining economic growth, especially in the long run. The study finally recommends that Ethiopia should seriously work in sustaining the current progress in growth hemisphere. For this purpose the country need to promote private and public sector investment, human capital development and institutional capacity building. Index Terms- Determinants and Economic Growth I. INTRODUCTION conomic growth is one of the most important issues in international political economy and one the major goals of all countries. It is the increase of gross domestic product. Therefore, it shows only the quantity of goods and services produced in a country in given period of time. It is a fundamental requisite to economic development. According to Nafziger (2005), economic development refers to economic growth gone with an improvement in the material well-being of the poor; a decline in agriculture’s share of national output; increase in the output share of industry and services; an increase in the education and skills of the labor force; and technical advances originating within the country. The economic achievements lead to the improvement of the standard of life, adequate conditions of medical care, improvement of the educational system and a better redistribution of incomes (Haller, 2012). Over the last 70 years the issue of economic growth has attracted increasing attention in both theoretical and empirical research. The long run economic growth is usually taken as the central issue of Economics science. As of World Bank (2015) world economy grew 2.6 percent in 2014 to reach $77 trillion in current prices, and growth is projected to accelerate to 3 percent in 2015. Developing economies grew an estimated 4.4 percent in 2014 and are projected to grow 4.8 percent in 2015. Growth in high-income economies has been updated from earlier forecasts to 1.8 percent in 2014 and 2.2 percent in 2015. According to Ajide (2014), one of the most fundamental economic issues that have received due attention in the economic literature to identify the determinants of economic growth. In this regard various studies have been conducted in all corners of the world. Ng’ang’ et al (2012), based on a panel data of 19 Sub Saharan countries for the years 1982-2000, identified the determinants of economic growth. The study found that physical capital formation, export and human capital significantly contribute to the economic growth among sub-Saharan countries. On the other hand, government expenditure, nominal discount rate and foreign aid significantly lead to negative economic growth. As of Abala (2014) human capital, government expenditure and openness of the economy are vital for the growth of the economy in Kenya. Ekman (2009) also found that women did positively impact Tunisia’s economic growth through increased labor force participation, increased working age population to total population ratio, and increased consumption. Khungwa (2007) identified that investments, terms of trade, openness and human capitals are the main determinants of growth in Malawi. These variables significantly affect growth both in the short run and long run. According to Ismaila and Imoughele (2015) the macroeconomics determinants of economic growth in Nigeria, under a stable inflationary rate, are: gross fixed capital formation, foreign direct investment and total government expenditure. In the same way, Kandenge (2010) stated that public and private investment, exports, imports, economic freedom, labor and human capital significantly and positively affect on short and long-term economic growth in Botswana. However, terms of trade and real exchange rate, are found to have a negative effect on short and long-term economic growth. As we have seen it is difficult to draw a single conclusion regarding what determines economic growth of countries. What is important in one country may not be a big deal in other country. Even with in the same country the outcome might be different based on the nature of data, time and methodology used for analysis. International organizations, national governments, research institutions, academic institutions and communities have strong interest in knowing the factors affecting economic growth of a given country. In Ethiopia various studies have been conducted to identify the drivers of Ethiopian Economic growth. There is, however, a lack of systematic review evidence on sources of economic growth. The central objective of this work is, therefore, to carefully review sample empirical studies conducted in Ethiopia and draw a reasonable conclusion. This review is expected to provide convincing and significant information for concerning body such as government, policy makers, and other institutions working to promote Economic growth and hence improving living standards of citizens. These bodies will be interested in recent evidence as the base for international, national and local decision-making process and policy development. E