Economic Development In Ethiopia

746 Words3 Pages
7 E T H IOP I A, T H E COMESA FTA AND R E G ION A L E CONO M I C R E L AT IONS The Ethiopian economy has changed significantly over the past eight years. The traditionally dominant agricultural sector is increasingly losing ground to a rapidly growing services sector. According to official statistics, real GDP growth averaged 11%over the past eight years, making Ethiopia the fastest growing non-oil-producing country in Africa. The government plays an active role in economic development by channeling foreign investment and other financial resources to the sectors it believes can contribute most to economic growth. It has invested heavily in infrastructure, education and health, which has created an environment conducive to economic growth.…show more content…
Instead, growth was largely driven by the services sector, which contributed 4.7% out of the 8.5%. The growth of the agricultural sector has been attributed to cereal crop production, and the growth of the industrial sector to construction. The growth of the services sector has been driven by wholesale and retail trade, along with real estate and rental services. As noted earlier, the construction boom has largely resulted from massive government investment in infrastructure. The growth in the services sector, in turn, has been attributed to growth in both external and internal trade. External trade and economic growth have mutually reinforced each other. Increasing government investment stimulated the demand for imported capital goods, and increased agricultural production boosted exports. The total value of imports is almost four times higher than that of exports, however, due to the difference between high value capital imports and relatively lower value agricultural exports. Except for the past two years, the value of imports grew by 20% a year on average; and the value of exports by 24% a…show more content…
This pattern is likely to continue for the next decade. Agricultural products will continue to dominate exports for the foreseeable future. This is because of growing export-oriented foreign investment in the agricultural sector, while it will take time for the industrial sector to start exporting high-quality manufactured goods. Capital goods will probably continue to dominate imports, as the government wants to continue investing in infrastructure and manufacturing capacity. Regional economic co-operation in the Horn extends beyond trade liberalisation and could also involve investment in infrastructure and aid. Much of the current literature on trade and its contribution to development deals with the implications of trade liberalisation. Trade liberalisation is meant to link national economies with the rest of the world, either bilaterally or multilaterally. Although trade is a major aspect of economic co-operation, it isn’t the only one. In recent years the Ethiopian government has taken steps to enhance non-trade aspects of economic co-operation, which could strengthen economic ties among the countries in the region. As in the case

More about Economic Development In Ethiopia

Open Document