Working Paper 299 - The Structure and Performance of the Ethiopian Manufacturing Sector

Oqubay Arkebe

Working Paper Series from African Development Bank

Abstract: Although Ethiopia has emerged as one of Africa’s fastest-growing economies, its manufacturing sector is still far from being an engine of growth and economic transformation. It currently plays a marginal role in employment creation, exports, and output, and falls short on stimulating domestic linkages. The sector is dominated by small firms and resource-based industries, low-value and low technology products, and weak inter-sectoral and intra-sectoral linkages. The manufacturing sector’s export orientation has been low and stagnant. Based on data and evidence from the past 25 years, the paper provides an in-depth analysis of the structure. and performance of the Ethiopian manufacturing sector and further explores the reasons behind the ‘paradox’ of the slow growth of industrial outputs and structural shifts. Since the mid-2010s, however, there are some promising signals that the manufacturing sector might be coming out of its doldrums and showing positive dynamics. The paper summarizes the growing challenges of building an industrial workforce and domestic capability, together with export capacity. The findings from this study show a bias for hope, as well as a potential structural transformation. JEL classification: L16, L60, L67, 014. Keywords: Ethiopia, firms, industries, manufacturing, structural transformation, industrial structure, industrialization, industrial policy, linkages, industrial parks.

Date: 2018-06-26
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