*5.1. Trend Analysis of Independent Variables*

The trend of real interest rates from 1985–2016 is shown in Figure 1. In this period, the value of real interest rates recorded both negative and positive values. According to NBE (2013/14), in recent years, despite the negligible change in nominal interest rates, the rate of real interests showed a significant improvement from the past year because of the drop in year-on-year headline inflation. In addition, despite the recent uptick, inflation has been kept within single digit levels largely aided by tight monetary and prudent fiscal policy stances.

Despite some fluctuation, the trend of foreign direct investment was increasing in Ethiopia throughout the period. In this regard, different actors like the Ethiopian government (MoARD), the sector organizations (EHPEA), and donors (USAID, SNV) have played a great role by identifying areas for further development of the fruits and vegetable sector in Ethiopia, both for the domestic and export market. Furthermore, in addition to the comparative advantage that the country possesses due to its proximity to the Middle Eastern and European markets, supportive government policies and favorable investment incentives had attracted foreign investors to invest in the growing sectors of the country. The trend of LnFDI is shown Figure 2.

Over a long period of time, the export performance of the horticultural sector was unsatisfactory. This by itself demonstrates the fact that the country's foreign earnings were dominated by a few agricultural commodities. In this regard, coffee remained the largest contributor to foreign earnings of the country. However, there has recently been a positive move by both government and donor countries to diversify the export base of the country. The horticulture sub-sector attracted the attention of policy intervention. As a result, export earnings from the horticultural sub sector had shown improvement in recent years, as shown by its trends in Figure 3.

The trend of LnRGDP shown in Figure 4 was rising over the last two decades. There was rapid and sustainable economic growth, especially over the last 15 years, as shown by the trends in Figure 4. This emanated from the fact that even though there was a gradual and steady shift in the structure of the economy by developing the manufacturing sectors; government policies of promoting export-led growth had focused on modernizing agricultural sectors which have long dominated the country's economic base. LnFGDP shown in Figure 5 was also rising throughout the period.
