In its latest report, the World Bank claims that Ethiopia’s Gross Domestic Growth (GDP) in 2017 increased to 10.9 percent. Is there another Ethiopia only World Bank and its friends in the Ethiopian government know about? For over the decade, the World Bank has been claiming a similar growth rate for Ethiopia, but for most Ethiopians (may be up to 99 percent of them), their living standard has been declining or remained the same. Can the World Bank explain why? Amy Copley, a research analyst and project coordinator with the Brookings Institutions analyzes World Bank’s report. Read below:
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The nexus of manufacturing and services sectors in Ethiopia
By Amy Copley | The Brookings Institutions
Last week, the World Bank released its latest Ethiopia Economic Update entitled, The inescapable manufacturing services nexus: Exploring the potential of distribution services. This report provides an overview of recent economic developments in Ethiopia, assesses the sustainability of the country’s growth model, and highlights opportunities for distribution services—defined primarily as “commission agents’ services, wholesale trade services, retailing services, and franchising” for the purposes of the report—to promote structural transformation and accelerate growth in Ethiopia.
In terms of Ethiopia’s recent economic growth trends, the report notes that gross domestic product (GDP) growth increased to 10.9 percent in the fiscal year 2017, following a year of more subdued growth (8 percent in FY2016)—due to drought and a decline in agricultural production. Still, the country’s average annual growth rate was 10.3 percent over the period 2005/2006-2015/2016—much higher than the regional average of 5.4 percent. Looking ahead, Ethiopia’s growth projections in the medium term are expected to average around 8 percent annually under the country’s current investment-focused and export-led growth model. To advance the government’s export development agenda and accelerate growth, however, the report argues that the government should support policies to strengthen the linkages between goods and services markets since they are both parts of “an interconnected chain of value added from production to final consumption.” In particular, distribution services could play a transformative role in increasing export competitiveness and enhancing both the services and manufacturing sectors in Ethiopia if certain challenges to the sub-sector, identified below, are addressed. […] CONTINUE READING
The World Bank Ethiopia Economic Update report was prepared by a team consisting of Mesfin Girma Bezawagaw (Senior Economist), Nora Dihel (Senior Economist), Michael Geiger (Senior Economist) and Zerihun Getachew Kelbore (Research Analyst)) with input from Claire Honore Hollweg (Economist), Esteban Rojas, Gonzalo Varela (Senior Economist), Michael Jelenic (Consultant), Koen Maaskant (Consultant), Jamie MacLeod (Consultant).
