Fiscal policy in ethiopia ethiopian economic association. This procedure is usually referred to as growth accounting. Sources of inflation and economic growth in ethiopia. Importance of economic growth organization of report policy and economic growth the algebra of growth 1. In the same way, after four years, that means in 2010, the country has achieved 10. Ethiopia has experienced rapid economic growth since 2005, with gross domestic product gdp growing at an average rate of 10. It in particular examines how fdi affects gdp growth, both directly and also conditioning on trade liberalization that ethiopia adopted in early 1990s. Current situation and challenges page 2 percent in average change of 0. Pdf determinant of economic growth in case of ethiopia. Especially after world war ii, tourism, banking, insurance, and transport began to contribute more to the. Growth should benefit from the homegrown economic reform program, which seeks to address macroeconomic imbalances and unlock structural. It follows that economic growth will be influenced by the ability to pay import bills through export revenues and the external trade performance of the economy. 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. Economic growth and poverty in ethiopia economic growth refers to an increase in the national income or per capita income 2.
Ethiopia economic growth is good but it must emphasis creating at least 40 million middle class in the next 10 years. Ethiopia economy gdp, inflation, cpi and interest rate. The ethiopian government has developed comprehensive agricultural and economic development plans that have contributed to the countrys substantial growth in agriculture, industry and services. In 20, the economic growth recorded in ethiopia was 9. Ethiopias economic growth miracle defies the one size fits all. Aim to be a global lightmanufacturing hub building a climate resilient green economy aim to become a net exporter of energy ultimate goal is to push ethiopia into. Growth and development in ethiopia economics tutor2u. Pdf infrastructure development and economic growth in. This economic growth was higher than the average ssa economic growth. However, basic challenges such as unskilled labor, high transport costs.
The relationship between government revenue growth and economic growth is investigated for ethiopia during the period 1974752014. Agriculture and the economic transformation of ethiopia. Federal democratic republic of ethiopia growth and transformation. Co integration and causality analysis fitsum sharew denbel, yilkal wassie ayen and teshome adugna regasa phd senior expert, ethiopian shipping and logistics service enterprise, addis ababa ethiopia. Hone mandefro and morten jerven a recent report by the world bank wb declared that poverty in ethiopia is down by 33% since 2000. Ethiopia gdp annual growth rate 19812018 data 2019. Over the past decade, ethiopia has benefited from robust economic growth. Economic growth, as proposed by neoclassical growth models, can be measured as the average annual change in the natural logarithm of gdp per person.
This paper examines the implications of this commitment to both growth and reduction in poverty, analyzes the progress underway, and diagnoses the critical elements of change in policy required to reach the objectives. Under haile selassie i reigned 193074, ethiopias economy enjoyed a modicum of free enterprise. Socioeconomic survey 20152016, wave 3 ethiopia, 2015 2016. Ethiopia gdp annual growth rate 19812018 data 20192020. Effects of ethiopias economic success and its position on. The production and export of cash crops such as coffee were advanced, and importsubstituting manufactures such as textiles and footwear were established. We read reports that the country has experienced strong economic growth measured in terms of gdp. In 2006, 2010 and 20, the average ssa countries annual economic growth was 6. In ethiopia economic growth is discussed without considering the consequences of population growth. The low share of the manufacturing sector, a crucial sector in transforming an economy, is a concern for the ethiopian. Poverty defined as the number of people unable to attain the minimum living standard 3. Real total and percapita gdp grew at average rates of 3. In each of the waves, the rural and small town eas were relisted which reflects easpecific population growth patterns.
Theoretically and empirically it has been shown that. The paper starts with an overview of ethiopia s economic growth and the change in the domes tic economic structure. The manufacturing sector, for example, has registered little incremental growth in employment that resulted from economic growth. The gross domestic product gdp in ethiopia expanded 9 percent in 2018 from the previous year. Given the low level of crop yields relative to those of other countries with comparable resources, and relative to best farmers and experiment stations, a. This page provides ethiopia gdp annual growth rate actual values, historical data, forecast, chart, statistics, economic. The relationship between inflation, money supply and. Economic reforms and structural changes in ethiopia since. There has also been tremendous growth in the number, diversity and market share of private businesses in the ethiopian economy. However, the speed with which the reform process should proceed is a debatable issue as it is concerned with the economic performance of a country prior to the introduction of economic reforms. Thereafter, high levels of foreign investment and the governments reform agenda will stimulate economic growth throughout 202124. 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. Ethiopias growth miracle, coupled with its large population and significant land mass, has attracted. Ethiopias per capita real gdp growth rate is predicted using ethiopian.
Gni formerly gnp is the sum of value added by all resident producers plus any product taxes less subsidies not included in the valuation of output plus net receipts of primary income compensation of employees and property income from abroad. Pdf causal relationship between government revenue growth. In the last three years of the growth and transformation plan gtp period, the economy has registered robust growth. This disparity in growth and slow development, in particular the sluggish. Yet the economic growth has not been accompanied by concomitant growth in formal employment. Impact of foreign direct investment on economic growth of. Productive capacity and economic growth in ethiopia. Apr 12, 2017 ethiopias national development plan ethiopias economic policy is guided by the second phase of the growth and transformation plan 201516 202021. Growth comes from the accumulation of capital both human and physical. Economic growth, development and poverty in ethiopia. The relationship between inflation, money supply and economic growth in ethiopia. Causal relationship between government revenue growth and. Introduction currently the objective of any developing country is to achieve sustainable economic development. In brief, we find that ethiopias rapid economic growth, concentrated in agriculture and services, was driven by substantial public infrastructure investment and supported by a.
Economic highlights o ethiopias fy201112 gdp growth was 8. In brief, we find that ethiopias rapid economic growth, concentrated in agriculture and services, was driven by substantial public infrastructure investment and supported by a conducive external environment. The ethiopian economy has shifted to a higher growth trajectory since 200304. Ethiopia has experienced rapid economic growth since 2005. The manufacturing sector is seen as the success of ethiopia s growth.
Maintaining a growth rate in agricultural gdp of six percent would provide enough employment growth to contribute to rapid economic transformation of the economy and rapid decline in poverty. The agriculture, industry and service sectors annual average growth was 9. This paper measures the impact of foreign direct investment fdi on economic growth in ethiopia based on annual time series data over the period 1974 to 2011. Ethiopia wins 2015 united nations public service award. Economic growth during this period 199091199900 was quite impressive. The economic outlook is positive, and real gdp growth is projected to stabilize at 7. 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. The african development bank group chief economist complex. The growth opportunities and challenges of the ethiopian economy. World bank lauds ethiopias economic growth in a report. The average growth rate of the gdp was stated to be 10.
Higher economic growth brought with it positive trends in poverty reduction in both urban and rural areas. Ethiopia macroeconomic handbook 2019 cepheus growth capital. This paper examines the economic effects of the demographic transition in developing countries. Ethiopias steady economic growth leads to poverty reduction. The relationship between inflation, money supply and economic. Ethiopias economic growth performance african development bank. Dec 20, 2019 graph and download economic data for gross national income for ethiopia mktgnieta646nwdb from 1981 to 2018 about ethiopia and gni. Ethiopia economy, politics and gdp growth summary the. The share of the population living below the national poverty line decreased from 30% in 2011 to 24% in 2016. Population and economic growth in developing countries minh quang dao professor of economics, eastern illinois university, 600 e. It is committed to rapid growth of agriculture as a means of accelerating the economic transformation an.
Economic growth is the principal, but not the only means to this objective. The ethiopian economy has experienced impressive growth performance over the last decade with average gdp growth rate of 11 %, which is about double of. The ethiopian government has the obligation and responsibility to defend the people of tigrai from shabiya. Middle class and the working poor are the true back bone of society.
Growth comes from the accumulation of capital both human and physical and from innovations which lead to technical progress. Over the last ten years, the country has achieved doubledigit growth in real terms, averaging 10. The future challenge for ethiopias economy is to transform the high growth rate into sustainable development, a process that can only happen through a structural transformation. Despite the lower economic growth of ssa countries, it was characterized as irregularity which is not the case of ethiopia economic growth. Economic highlights o ethiopias fy2012 gdp growth was 9. Aug 17, 2016 ethiopia has experienced rapid economic growth since 2005, with gross domestic product gdp growing at an average rate of 10. Recent economic developments the ethiopian economy continued its strong expansion in fy14 with real gdp growing by 10. Ethiopian economic growth compared to sub saharan africa. Economic development refers to multidimensional process of reorientation and. A notable example can be found in the grand ethiopian renaissance dam gerd where ethiopia plans to leverage the blue nile to become africas largest exporter of electricity. The impact of ethiopian labor laws on business efficiency. This page has economic forecasts for ethiopia including a longterm outlook for the next decades, plus mediumterm expectations for the next four quarters and shortterm market predictions for the next release affecting the ethiopia economy.
Although data showing healthy export growth points to a good start to fiscal year 2019a2020 july 2019july 2020, the outbreak of coronavirus will be taking a heavy toll on the economy. Gross national income for ethiopia mktgnieta646nwdb. The pace of poverty reduction in ethiopia has been impressive. Ethiopia economic outlook african development bank. Based on the most recent household living standards survey, ethiopia s poverty levels fell by around 20% between 2011 and 2016 although they remain high especially in the rural areas and for the bottom 40% of the population. Productive capacity and economic growth in ethiopia the united. The government is implementing the second phase of its growth and transformation plan gtp ii which will run to 201920. Growth and transformation plan gtp 201011201415 draft. Using the aggregate production approach cobbdouglas production functions of gdp measurement, solow 1957 showed how factor accumulation and technological progress determine the path of. The impact of fast economic growth is reflected in the improvement in the monetary welfare levels of ethiopian households. Accordingly, investments on growth enhancing sectors such as infrastructure and social. It attributed the reduction to agricultural growth investments in basic services and effective safety net. Mobilising ethiopian diaspora capital and knowledge networks for economic growth and transformation.
Economic growth brought with it positive trends in reducing poverty, in both urban and rural areas. Growth was driven mainly by the services sector from the supply side and public investment from the demand side. Pdf the paper performs a qualitative narrative appraisal of the existing empirical literature on the key macroeconomic determinants of. Ethiopia is driving economic growth through the governments laserlike focus on sectors such as manufacturing, energy and infrastructure. Mekonen tadesse editor, ethiopian economic associationeea, departments of economics of aau. Economic growth greatly intensified since 2005 at slightly above 10% per annum in the ensuing 10 years, allowing per capita gdp to grow at nearly 8% annually. Program coordinator, centre for world solidarity, 12438, st. Key growth drivers in ethiopia real gdp per capita 24. Moreover, the government of ethiopia has taken a position on this matter.