Growth In Ethiopia

Economic Growth in Ethiopia and Its Determinants: Lessons from Southeast Asian Countries

Researcher: Amare Berhanu

Supervisor: Dr. Kamaljit Singh (Professor of Economics)

1. INTRODUCTION

Growth of Economy of a country is the prominent issue in less-developed country like Ethiopia. Hence, it is the fundamental requisite to economic development. The issue is getting serious attention specially countries like Ethiopia.

Ethiopia is one of sub-Saharan less developed countries, its economy heavily dependent on agriculture, which shares 43 % (UNDP, 2014) of the GDP. Accordingly, more than 80% of the population gains its livelihood directly or indirectly from agricultural production. In spite of the fact that the history

Factors which determine economic growth in developing countries might be different from that of developed countries. However, the most basic determinant of economic growth identified by both endogenous and neoclassical growth models is investment. Hence a lot of similar works focus on it. Another prominent factor supposed as affecting economic growth is government burden whose outcome can be negative or positive. Many see that, such government burden as representing the drain which government may present to private sector. Although government can play a significant role for the economy, it can be a heavy burden if it compels high taxes, uses it to maintain public programs and a distended bureaucracy, and impedes the economy by considering roles most suitable for the private sector (Loayza and Soto, 2002). It has also been posited theoretically that openness to trade and other factors affect economic growth through several channels, like increasing exploitation of comparative advantage, technology transfer and diffusion of knowledge, and

On the other hand, what is the secret behind Southeast Asian countries’ economic success is another issue which has attracted attention of developing countries. Their capacity to move from extreme poverty to an emerging global economic power has attracted the attention of the researcher. These concerns have motivated the researcher to prepare this synopsis to conduct the research for identifying determinants that determine the economic growth of Ethiopia and for assessing any lesson that can be drawn from the successful Southeast Asian countries.

Therefore, a thorough investigation of the determinants of economic growth of Ethiopia and lessons from Southeast Asian countries success are the intended output of the proposed study which will contribute a lot for policy makers and international institutions future interventions, and researchers further studies.

The study will be informative for further research