The Recent Economic Development in Ethiopia: Comparative Descriptive Analysis

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By Teshome A.(PhD) 30 June 2014

1.      Introduction

The various reports have been published in 2014 which indicate the economic development in the world. These are the report that provides the performances and challenges of economic development in the different parts of the world. The availability of this report enables policy makers and scholars to see the real change in social and economic development. Ethiopia started economic reform programs since 1991. The country has introduced wide ranges social and economic development programs and plan during the last two decades. The recent economic and social change in the country is incredible. This economic growth and development has been witnessed by the reputable and know world report in 2014.

The main purpose of this brief article is to present the recent economic development in Ethiopia. The article used the report published in 2014 by International Monetary Fund (IMF)), World Bank (WB), Africa Development Bank (ADB), World Health Organization (WHO), and Organization for Economic Cooperation and Development (OECD). The study covers the period between 2006 and 2013. The article is consisting of four sections including introduction. The next section presents economic growth of Ethiopia and selected African countries. The third section explains the economic development in the country. The last section is summery

2. Economic growth in Ethiopia

Economic growth refers to the percentage change in the national output (Gross Domestic Product) of the given economic. Gross Domestic Product (GDP[2]) refers to the market values of all good and service produced in the economy. Real GDP used as a measurement of economic growth. As you can see in the Table 1 below in 2006 the annual economic growth of Ethiopia was 11.5 percent. In the same way, after four years, that means in 2010, the country has achieved 10.6 percent economic growth. In 2013, the economic growth recorded in Ethiopia was 9.7 percent. This economic growth was higher than the average SSA economic growth. In 2006, 2010 and 2013, the average SSA countries annual economic growth was 6.3, 2.6 and 4.9 percent respectively. Despite the lower economic growth of SSA countries, it was characterized as irregularity which is not the case of Ethiopia economic growth. The last eight years average economic growth of Ethiopia was 10.6 but the average SSA countries were 5.3 percent.

Table 1: Economic growth in selected countries between 2006 and 2013

Year

Ethiopia

Kenya

Uganda

SSA

Nigeria

South Africa

2006

11.5

6.3

7

6.3

6.2

5.6

2007

11.8

7

8.1

7.1

7

5.5

2008

11.2

1.5

10.4

5.7

6

3.6

2009

10

2.7

4.1

2.6

7

-1.5

2010

10.6

5.8

6.2

5.6

8

3.1

2011

11.4

4.4

6.2

5.5

7.4

3.6

2012

8.5

4.6

2.8

4.9

6.6

2.5

2013

9.7

5.6

6

4.9

6.3

1.9

Average growth

10.6

4.7

6.4

5.3

6.8

3

Source: IMF report, 2014

When someone compares Ethiopia economic growth of the leading Africa economy such as Nigeria and South Africa, Ethiopia economic growth was higher than these countries economic growth. Nigeria and South Africa achieved 6.2 and 5.1 economic growth in 2006. While Nigeria economic growth show slight change in 2013 by attaining 6.3 percent against the South Africa economic growth which realized only 1.9 percent economic growth. This indicts that the recent Ethiopia economic growth in Ethiopia was stronger than Nigeria and South Africa. Ethiopia economy growth was higher than its neighbors countries such as Kenya and Uganda. According to Claire Schaffnit-Chatterjee (2013), Ethiopia has averaged 8.7% annually over the past five years thanks to the expansion of agriculture and services. Ethiopia has thus been the fastest-growing economy in Sub-Saharan Africa (SSA). In the same way OECD (2014) confirmed that, Ethiopia’s strong economic performance continued for the tenth consecutive year, with real GDP growth estimated at 9.7% in 2012/13. As in the preceding years, this growth continued to be broad-based, with all sectors contributing; the service sector accounted for 46.1% of the growth, followed by agriculture (32.1%) and industry (21.8%).

3.      Economic Development

Economic development refers to the multidimensional reorganization and reorientation of the entire economic system that improve the living standard of the welfare of the people. The economic performances of any country should be observed by the degree of its wider economic and social change in the country. Economic development may not indicate the social and economic development in the country. Since 1970 many scholars started to use other measurements than Gross Domestic Product (GDP) as a measurement of economic development. The economic development in the given country should be evaluated in terms of social and infrastructure development in the country rather than using only national output produced in the economy. In this brief article I used HDI (Human Development Index), social development and infrastructure development as indicators of economic development in the country.

Human Development Index is a measurement of human development baseds on three dimensions. This index is a composite index as compared to the GDP. UNDP introduced HDI since 1991 as measurement of economic development. Ethiopia human development index was 0.2775 in 2007. In 2012 the HDI reached 0.396. According to various reports, Ethiopia was achieved the second fast HDI growth between 2000 and 2012 as compared to the other countries in the World. The HDI has increased during the last few years indicts the social development in the country. The major reasons for the increase in human development indices were due to the improvement in life expectancy, per capita income and education provision. According to World Health Organization report (2014), life expectancy in Ethiopia reached 64 years. This makes Ethiopia the second country in the world with higher growth of life expectancy during the last decades. The same report indicated that infant and child mortality rate declined from 121 and 204 in 1990 to 47 and 68 per 1000 live birth in 2012 respectively.

This is the outcome of the strong commitments of the Government of Ethiopia on improving the quality of social life in the country. Further, based on the Africa Development Bank Report (2014), the per capita income in Ethiopia reached $ 519 in 2013 as compared to $ 191 in 2006. Within just less than ten years, the country increases the per capital income by more than three folds. The number of Scholl enrollment increase in all level of education (Primary, Secondary and Tertiary). According to OECD (2014), Primary school enrolment rates increased from 68% in 2004/05 to 85.7% in 2012/13. Regarding infrastructure the number of mobile subscriptions and road net work has shown the recent remarkable performances in the country. According to World Bank Data, the number of mobile subscribers increased from 866 thousand in 2006 to 20 million in 2012. The size of the road network has increased from 26, 550 KM to 85,966KM, and the road operating in good condition has risen from 20 percent to 70 percent (World Bank, 2014). These all social and infrastructure development in the country contribute for reduce poverty and increase national productivity.

4. Summery

The reports published in 2014 by different world organizations indicated the stable and broad base economic change in the country. The change observed in the country gave a clear picture for all people in the country as well as outside the country about poverty stricken country can be the middle income economy in 2025. This would happen if the country continued to invests all it human and capital resource in the area that lead to prosperity. The most important precondition is clear and visionary long term development policy and plan in the country. We have already set out visionary development policy and plan that would mobilize all our efforts to accelerate economic development. These efforts would be materialized if we work together on our common agenda or enemy that is poverty. What we have seen during the study period was a clear signal that the country can attain the higher level of economic growth and development. This was what has been witnessed about the recent economic development in Ethiopia by most of the world reports on 2014.

References

OECD (2014): African Economic Outlook 2014

WHO (2014): World health statistics 2014

UNDP (2013): Human Development Report 2013, The Rise of the South, Human Progress in a Diverse World, Gilmore Printing Services Inc, USA

Claire Schaffnit-Chatterjee(2013): Talking point, Ethiopia African Tiger, Deutsche Bank AG, DB Research, D-60262 Frankfurt am Main, Germany

ADF (2014): African Statistical Yearbook

World Bank (2014): World Bank press on road improvements and maintenance in Ethiopia, February 19, 2014

 

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