This strong economic performance has given ethiopia an excellent platform from which to pursue its national development agenda. Ethiopias strategy for sustaining the rapid and broadbased growth path hinges on the following pillars. It seeks to answer the question what proportion of recorded economic growth can be attributed to growth in the capital stock, growth of the labor force and changes in overall efficiency. Urban unemployment in the formal sector declined over the last decade, albeit slowly, and was reduced from 23 percent in 2004 to 17 percent in 2015. The manufacturing sector is seen as the success of ethiopias growth, and its development to a large extent the product of an activist. Ethiopia s strategy for sustaining the rapid and broadbased growth path hinges on the following pillars. I begin in section 2 by placing growth in ethiopia in its politico economic and historical contexts. This volume is a collection of selected empirical studies on determinants of economic growth and development in ethiopia. The government is devoting a high share of its budget to propoor programs and investments. Economic growth, development and poverty in ethiopia. The report includes countryspecific threeyear forecasts for major macroeconomic indicators, including commodity and financial markets. The impact, infrastruc ture development played on economic growth trajectory of a country is the center of debate in academia, research and policy circle. The country has experienced fast economic growth in the last decade, averaging around 10% a year. Productive capacity and economic growth in ethiopia 1 introduction ethiopia is one of the largest least developed countries ldcs in subsaharan africa, with a popula.
Ethiopias steady economic growth leads to poverty reduction. I am pleased to present the 2014 national human development report, which has been written on the theme of accelerating inclusive growth for sustainable human development in ethiopia. Even as ethiopia continues its development and seeks to transition its economy toward higher valueadded sectors like manufacturing and services, agriculture will remain a crucial segment of economic growth, and an important component of ethiopia s development trajectory. The major objective of gtp ii is to serve as a spring board towards realizing the national vision of becoming a low middleincome country by 2025, through sustaining the rapid, broad based and inclusive economic growth, which accelerates economic transformation and the journey towards the countrys renascence.
The labor productivity hypothesis asserts that individuals who are healthier have higher returns to labor input. Growth and transformation plan gtp 201011201415 draft. Degefu department of statistics, hawassa university, hawassa, ethiopia abstract micro and smallscale enterprises have key roles to ensure economic growth and reduceof hawassa city, ethiopia poverty in developing countries. Economic growth, particularly in agriculture, has been an important driver of. The recent fall in global oil prices is expected to have a positive economic impact on ethiopia. But under different conditions, similar rates of growth can have very different effects on poverty, the employment prospects of the poor and broader indicators of human development. Ethiopia is now africas fastest growing economy cnn. The next section presents economic growth of ethiopia and selected african countries. There are many ways in which the ethiopian economy can be applied to different areas of the a level economics course. The ethiopian economy has experienced impressive growth performance.
Pdf determinants of food security in the oromiya region of ethiopia. Economic growth and development in ethiopia request pdf. The asia pacific economic cooperation council apec countries and economies are taken as examples here. Pdf the study elucidates the mystery surrounding the belief that, infrastructure development induces economic growth. Ethiopias national development plans, including the current growth. Road sector development and economic growth in ethiopia. Determinants and potentials of foreign trade in ethiopia. Productive capacity and economic growth in ethiopia the united.
Akshaya kumar mohanty abstract the study evaluates the impact of external debt on economic growth in ethiopia for the period 19812014. In developing countries like ethiopia economic growth is one of the preconditions for economic development. Ethiopia a growth miracle ethiopia investment commission. Our mission in ethiopia works to advance an environment that supports increased private sector investment and growth. Ethiopia has over the past decade achieved strong and robust economic growth coupled with the expansion of social services. The role of health in economic development is analyzed via two channels. Growth and development in ethiopia economics tutor2u. Factors that determine the growth of micro and small enterprises. Apr 12, 2017 this is a revision presentation on aspects of growth and development in the fastgrowing country of ethiopia. Effect of inflation on economic growth of ethiopia. Ethiopias main challenges are sustaining its positive economic growth and accelerating poverty reduction, which both require significant progress in job creation as well as improved governance.
Sustainable development and poverty reduction program. Strong economic growth therefore advances human development, which, in turn, promotes economic growth. The major objective of gtp ii is to serve as a spring board towards realizing the national vision of becoming a low middleincome country by 2025, through sustaining the rapid, broad based and inclusive economic growth, which accelerates economic transformation and. Growing manufacturing industry in ethiopia case study. It is over 15 years since the last national human development report for ethiopia was published and much has changed in the intervening period. Dbe development bank of ethiopia eal ethiopian airlines edri ethiopian development research institute. The third section highlights the economic growth and development in the country. Ethiopia aims to achieve middleincome economy as of 20202023 while. The assumption that there is a uniquely correct or at least a uniquely appropriate definition of economic growth, openly invites a very fundamental type of criticism. Ethiopia belongs to saa countries where poverty is widespread though the country has. Ethiopia overview international development, poverty.
The relationship between infrastructure development and economic growth is investigated for ethiopia during the. Current efforts are directed towards sustaining doubledigit growth episodes by deepening struc. The impact of government expenditure on economic growth. The ethiopian road authority era investigated the link between the country. The impact of human capital development on economic growth in. The gtp recognizes that sustainable development in ethiopia can only be achieved if development is pursued in the social, economic and environmental areas in a balanced manner and ensuring that benefits accrued are equitably shared among the citizens of the country. The second section discusses the economic growth and poverty in ethiopia. The country is a net importer of fuel, which accounts for onefifth of goods imports. It is time to see the performances and challenges of growth and transformation plan in ethiopia. Ethiopia is a fascinating country to use as a case study in economic growth and development according to a recent editorial in the financial times, ethiopia has transformed in 20 years from a famineravaged nation into a destination for savvy and wellknown private equity groups such as kkr. The various reports have been published in 2014 which indicate the economic development in the world. Determining the effect of inflation on the economic growth of one country must be considered as a prior issue to build up a healthy economy. Ethiopia growth and transformation plan ii gtp ii green.
Over the last ten years, the country has achieved doubledigit growth in real terms, averaging 10. The third section explains the economic development in the country. I distinguish three successive policy regimes in the post1960 period and use growth accounting and crosscountry econometrics to characterize the. In the past five years, ethiopia has experienced substantial growth in all three major economic sectors agriculture, industry and services. Ethiopias growth miracle, coupled with its large population and. Ethiopia has registered strong economic and social progress in the last decade the country achieved an average annual growth rate of 9. Oct 26, 2017 the story of ethiopias incredible economic rise. Growth and transformation plan ii united nations in ethiopia. As a result, there is decreased or less investment in ethiopia, decreasing economic growth. This paper is the third of four papers related to pastoral economic growth and development in ethiopia that were commissioned by the department for international development dfid at the request of the government of ethiopia. The interaction between growth and inflation is one of the macroeconomic problems. Pdf infrastructure development and economic growth in ethiopia. Ethiopia s growth miracle, coupled with its large population and significant land mass, has attracted. Ethiopia real gdp growth annual % ethiopia real gdp per capita growth annual %.
Ethiopia s main challenges are sustaining its positive economic growth and accelerating poverty reduction, which both require significant progress in job creation as well as improved governance. The impact of human capital development on economic growth in ethiopia. Pdf infrastructure development and economic growth in. Factors that determine the growth of micro and small. However, basic challenges such as unskilled labor, high transport costs. Ethiopia economic development the policy of the ethiopian government is to create the conditions necessary for sustained economic growth. Economic growth and development in ethiopia springerlink. Productive capacity and economic growth in ethiopia. Economic developments in ethiopia economic development shows the change in economic growth and at the same time change in the living standard of the people.
Since agriculture currently dominates ethiopia s economy and employment, however, there is an issue as to what its role should be in getting from here to there. Infrastructure development and economic growth in ethiopia. Ethiopias growth miracle, coupled with its large population and significant land mass, has attracted. The study generally indicated that there is a wellestablished nexus between the. Ethiopia economy gdp, inflation, cpi and interest rate. Greater economic growth is key to reducing poverty, the report notes. The consultation process and overview of the major outcomes 29 iv development and poverty reduction challenges 33 v overview of ethiopia s development goals, policies, strategies, and targets 36 5. Growth should benefit from the homegrown economic reform program, which seeks to address macroeconomic imbalances and unlock structural. The main objective of this paper is to test that, whether inflation is an indicator or obstacle for economic growth of ethiopia. However, there are also some other indirect factors, which affect the causal relationship between exports and economic growth.
Sectoral economic growth and structural transformation in. Contribution of ethiopia to the preparation of sdgs and. While it provides a comprehensive picture of the state of economic development and growth in most parts of the continent, the main focus is on economic development and growth in ethiopia and. Nov 10, 2010 ethiopia economic development the policy of the ethiopian government is to create the conditions necessary for sustained economic growth. Economic development ethiopia issues, growth, economic. There has also been tremendous growth in the number, diversity and market share of private businesses in the ethiopian economy. Federal democratic republic of ethiopia growth and transformation. The celebrated wagners 1883 1958 law postulates that government spending is income elastic and that the ratio of government spending to income tends to grow with economic development. Effect of inflation on economic growth of ethiopia science. Ethiopia global economic prospects examines trends for the world economy and how they affect developing countries.
Economists and other social scientists jealously guard their right to define concepts as they see fit. Economic developments in ethiopia economic development shows the change in economic growth and at the same time change in. Ethiopia is africas fastestgrowing economy world economic. Since economic development stages differ widely among apec countries, the examination will be a good test of how universally the balassasamuelson hypothesis may apply. Time series data on real gross domestic product growth rate, external debt stock. The core argument for editing this book is to provide an uptodate picture of the state and patterns of growth and development in ethiopia.
Even as ethiopia continues its development and seeks to transition its economy toward higher valueadded sectors like manufacturing and services, agriculture will remain a crucial segment of economic growth, and an important component of ethiopias development trajectory. The major objective of gptii is to serve as a springboard towards realizing the national vision of becoming a low middleincome country by 2025, through sustaining the rapid, broadbased, and inclusive economic growth, which accelerates economic transformation and the journey towards the country. The relationship between government expenditure and economic growth has been an ongoing issue in debates on economic development. With sustained economic growth at levels predicted by the imf, the wider world will have to reappraise its view of a nation thats blazing a trail for economic development on the african continent. The ethiopian government has developed comprehensive agricultural and economic development plans that have contributed to the countrys substantial growth in agriculture, industry and services. Ethiopia wants to join the ranks of emerging economies by 2025 with the support of this sector.
Growth and transformation plan ii gtp ii is ethiopia s fiveyear development plan for 20152020. Ethiopia economic growth growth is expected to moderate this year, although it will remain healthy on the back of robust household spending, sustained public infrastructure investment and upbeat fdi amid ongoing economic liberalization efforts. Their research investigations revealed that the key determinants that significantly affected the economic growth of ethiopia, as per their order of. Ethiopia s national development plans, including the current growth. Therefore, the general objective of this study was to analyze the economic growth and social development performances in ethiopia during the first growth and transformation plan. Thus, gtp ii is primarily considered to be an important milestone towards. Ethiopian economic growth compared to sub saharan africa. The government aspires to an agricultureled industrialization and focuses its attention on food security, rural. World bank, world development indicators, in us dollar terms viii. Ethiopia a view of the capital of ethiopia, addis ababa. Ethiopias economic growth performance african development bank.
Ministry of finance and economic development mofed from csa website. The economic outlook is positive, and real gdp growth is projected to stabilize at 7. Ethiopia needs to put in place and implement policies that lead to faster and greater economic growth to be able to make further substantial dents on the poverty levels, said nora carina dihel, senior economist and coauthor of the report. Agriculture and the economic transformation of ethiopia. Economic growth refers to the percentage change in the national output gross domestic product of the given economic. Pdf policy options for pastoral development in ethiopia. Ethiopia economic outlook african development bank. Economic growth without structural transformation the case. Ethiopias national development plans place emphasis on promoting exportled industrialization with a focus on light manufacturing. Farmers have reacquired the economic freedom of price, of production, and of settlement. Economic growth over the past years was accompanied by a reduction of unemployment, although it remained high. Policies have the potential to alter not just the rate of. A woreda environment management planning manual was prepared. However, the contribution of the industrial sector to gdp, employment and exports remains low.
A decrease in economic growth decreases the amount of money that the government can spend on essential services, such as education, health, and infrastructure, hindering economic development in ethiopia. The role of financial instituions in economic growth of ethiopia. This procedure is usually referred to as growth accounting. Economic development transforms an economy from one that is largely agricultural to one that is largely manufacturing and services. Ethiopia gdp annual growth rate 19812018 data 2019. The short term economic risks are felt to the economy through volatility and instability of foreign exchange earning which could have adverse macroeconomic effects on growth, employment, investment planning, import and.
Ricardo in his study in 1817, notes that trade facilitates products output with a. The role of financial instituions in economic growth of. This page provides ethiopia gdp annual growth rate actual values, historical data, forecast, chart, statistics, economic. Selection of key themes for ethiopia developmental state via 5 year plans rapid industrialisation strategy key role of logistics infrastructure in growth building tourism around ethiopian airlines fragile state political unrest emergency rule o.
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