edited by Elena Vallino, Università di Torino e OEET
INTRODUCTION
Elena Vallino
Ethiopia is the second most populated country in Africa. Due to the specificities of its history – it is the oldest independent African country and experienced only an exceptionally short period of colonization - it became one of the symbols of African independence during the colonial time. Ethiopia was one of the first countries to sign the Charter of the United Nations, and it played an active role to the growth of Pan-African cooperation. These processes culminated in the establishment of the headquarters of the African Union and of the United Nations Economic Commission for Africa in Addis Ababa. During the ‘70s and the ‘80s Ethiopia experienced civil conflicts which hindered its economy and social development. In 1993 separated from Eritrea after a long conflict. The country has since then recovered and at the present moment experiences the largest Gross Domestic Product in East and Central Africa.
Ethiopia is one of the most evident cases of a tendency highlighted by scholars and macroeconomists about the African continent: growth without industrialization.
Usually developing countries that produce sustained growth without relying on massive exploitation of natural resources pursued a strategy of export-oriented industrialization. However this particular kind of structural change is difficult to detect in many well-performing Sub-Saharan African countries, which, according to Dani Rodrik in an article on Project Syndicate (October 10, 2017), seem to experience even a kind of “premature deindustrialization”, since they do not catch up with skill-intensive manufacturing opportunities as many Asian economies did. He wonders whether some African countries are developing a new growth model, by observing some paradoxes. In many African low-income economies, among which Ethiopia, labour has been shifting from low-productivity agricultural activities to activities with higher productivity. However these are mostly in the service sector rather than in the manufacturing. Moreover, while labor productivity seemed to increase strongly in agricultural activities thanks to massive public investments in this sector, it dropped in non-agricultural activities, due to an insufficient development of the modern sector. Without a structural change of the economy and a long-lasting productivity growth in the manufacturing sector, high economic growth may not last, with negative consequences on the general development process of these African countries.
Ethiopia experienced a very high economic growth in the last decade and it improved dramatically its position in the ranking of African economies in the same period. In 2008 it was the fastest-growing economy among the non-oil-dependent African countries. However, despite the high GDP growth, its income per capita remains one of the lowest in the world. According to the scientific literature, the combination of these conditions qualifies Ethiopia as emerging economy and while it is interesting to observe its contradictory social and economic trends, it is definitely challenging to interpret and explain them. Development indicators performed well in terms of reduction of poverty and illiteracy and of improvement of health conditions. The government invested in large infrastructures and development programmes, focused on the modernization of the agricultural sector, in the creation of industrial parks, in the hydroelectricity production and in the development of Micro and Small Enterprises. These measures seem to have increased significantly agricultural productivity and incomes, with positive demand spill overs to other sectors. However, data still show that an actual development of the manufacturing sector did not occur, labor productivity in non-agricultural sectors is still low and the majority of the population still live in rural areas. The labour market presents also contradictory features: unemployment rates fell along with economic growth, but remained high. The labour force improved its education level, thus reflecting positive outcomes in terms of literacy and skill development trends, but did not change its features and composition, and real wages did not reflect the educational improvement.
This issue of our newsletter offers a broad insight into the Ethiopian country, both from a macroeconomic and microeconomic point of view, that allows to deepen different and challenging elements of its economy and society.
Jan Priewe presents a broad overview of the Ethiopian macroeconomic trends, highlighting its contradictions, and he presents a narrative for interpreting and explaining on the one hand Ethiopia’s growth miracle, and on the other hand the objectives that are still not reached. By doing so, he underlines along which dimensions Keynesian and structuralist concepts of development are able to explain the country’s development path and in which fields these theories can not apply.
Cecilia Navarra addresses the issue of the Ethiopian labor market and the interplay between the formal and informal entrepreneurial activities. She considers the contradictory findings about the impact of the governmental programs for the development Small and Medium enterprises, which ideally aimed at fostering economic growth and social development by supporting a formalization process of the economy.
Alexander Jordan deals with rural poverty in Ethiopia, which is still persistent due to the vulnerability to climatic shocks, potential depletion of natural resources used for primary energy source, and lack of infrastructures. He presents the potentiality of renewable energies development to address different challenges faced by Ethiopian rural population.
Pierluigi Conzo offers an insight on the issue of fertility and life satisfaction in rural Ethiopia. By using national data, he writes about the interplay among objective and subjective poverty conditions, fertility dynamics and perception of happiness, with considerations on gender and life stages biases. He highlights how the findings may inform policy making with interventions for fostering development in rural areas.
