Development in a Complex World: The Case of Ethiopia

Ricardo Hausmann, Tim O'Brien (tim_obrien@hks.harvard.edu), Timothy Cheston (tim_cheston@hks.harvard.edu), Ibrahim Worku Hassen, Can Soylu, Kishan Shah, Nikita Taniparti, Pankhuri Prasad and Pablo Neumeyer
Additional contact information
Tim O'Brien: Center for International Development at Harvard University
Timothy Cheston: Center for International Development at Harvard University
Ibrahim Worku Hassen: Center for International Development at Harvard University
Kishan Shah: Center for International Development at Harvard University
Nikita Taniparti: Center for International Development at Harvard University
Pankhuri Prasad: Center for International Development at Harvard University

No 423, CID Working Papers from Center for International Development at Harvard University

Abstract: This research compendium provides an explanation of Ethiopia’s fundamental economic challenge of slowing economic growth after an exceptional growth acceleration — a challenge that has been compounded by COVID-19, conflict, and climate change impacts. Ethiopia has experienced exceptional growth since the early 2000s but began to see a slowdown in the capacity of the economy to grow, export, and produce jobs since roughly 2015. This intensified a set of macroeconomic challenges, including high, volatile, and escalating inflation. This compendium identifies a path forward for more sustainable and inclusive growth that builds on the government’s Homegrown Economic Reform strategy. It includes growth diagnostics and economic complexity research as well as applications to unpack interacting macroeconomic distortions and inform diversification strategies. Drawing on lessons from past success in Ethiopia and new constraints, this compendium offers insights into what the Government of Ethiopia and the international community must do to unlock resilient, post-conflict economic recovery across Ethiopia. The research across the chapters of this compendium was developed during the Growth Lab’s research project in Ethiopia from 2019 to 2022, supported through a grant by the United States Agency of International Development (USAID). This research effort, which was at times conducted in close collaboration with government and non-government researchers in Ethiopia, pushed the boundaries of Growth Lab research. The project team worked to understand to intensive shocks faced by the country and enable local capability building in the context of limited government resources in a very low-income country. Given the value of this learning, this compendium not only discusses challenges and opportunities in Ethiopia in significant detail but also describes how various tools of diagnostic work and economic strategy-building were used in practice. As such, it aims to serve as a teaching resource for how economic tools can be applied to unique development contexts. The compendium reveals lessons for Ethiopian policymakers regarding the country’s development path as well as numerous lessons that the development community and development practitioners can learn from Ethiopia.

Keywords: Ethiopia (search for similar items in EconPapers)
Date: 2022-11
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Working Paper: Development in a Complex World: The Case of Ethiopia (2022)
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