The Political Economy of Growth in Ethiopia

With a population of over 70 million in 2005, Ethiopia is the second most populous country in Africa. Its history as a political entity stretches back to antiquity, and almost uniquely within Sub-Saharan Africa, it has never been colonized. Yet Ethiopia is one of the poorest countries in the world. Rainfall and commodity prices have a major influence on year-to-year growth, but I argue in this chapter that the detrimental impact of these exogenous factors has been accentuated by a policy environment that
has reflected the narrow and shifting influences of politically dominant interest groups. At the microeconomic level, investment behavior has reflected the pervasive influence of both exogenous and policy-generated risks to income and property. In the aggregate, poverty and slow growth have reproduced themselves over time. Each reflects the joint influence of structural vulnerabilities and weaknesses in governance. Against this background, key public-sector institutions have provided a critical
minimum level of policy continuity in Ethiopia. In their absence, the impact of a volatile political economy on growth would have been even greater.The Political Economy of Growth in Ethiopia

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