This study is aimed at investigating the impact of institutional quality on export performance and economic growth. The study finds a positive partial impact of both export and institutional quality on income. Controlling for institutional quality
however, the impact of export on income diminishes significantly. Estimation of the interaction terms of institutional quality and export variables could not prove the claim that "institutional quality is a necessary condition for export to have a
positive impact on income".
By applying simple simulation exercise using cross-country data, the study estimates that Ethiopia's export to its major trading partners could increase by 10% for simple improvement in its institutional quality. The study finds that Ethiopian exporters
who registered higher export growth in the last five years have better feeling about the institutional environment than those who didn't. The effect is higher for exporters who engage in manufacturing goods export.