Structural Shift In The Ethiopian Economy

The process of economic growth in an economy has been results in clear structural changes and escorted by enormous change in the composition of economic activity. As a result economic development described as a result of successive and continuous disequilibria. According to (Fisher, 1939, Clark, 1940) during a country growth and their gross domestic product (GDP) basket increases, the economy shifts away from agriculture towards industrial and services sectors, and then the latter two sectors (industry and service) have higher contribution to GDP than that of the former sector (agriculture). Lewis (1954), Chenery (1979) and Kuznets (1965, 1973) also found that economic development is a continuous gradual change and structural transformation

The shift is maybe best exemplified in terms of the changes in the shares of agricultural, industrial and services sector in the gross domestic product (GDP). From a primarily agro-based economy during the 1960s and 1970s, the Ethiopian economy has emerged as pre-dominant in the services sector at this time, but the industrial sector not well developed at the required level. The shift in the economic composition is probable to cause considerable changes in the production and demand linkages among various sectors of the economy and in turn, could have significant implication for the growth and development process of the Ethiopian economy. In the Ethiopian context, currently this issue of inter sectoral linkage has serious short and long-term implications. While a proper understanding of the sectoral linkages in view of the recent slowdown of the economy in 2015/16 due to unfavorable weather condition and drought is an immediate priority. The issue assumes importance in designing appropriate long-run strategy to achieve a sustained 7.3-7.5 percentage rate of growth in real GDP (RGDP) oriented reforms envisaged in the recently adopted second Growth and Transformation Plan (GTP

This is about double the average growth of Sub Sahara Africa and triples the world average growths over this period. This rate of growth has enabled Ethiopia being assigned as one of the fastest growing economies in the world. The growth performance continued robust and broad based from the production side, due to all the major sectors registered positive and significant growth (UNDP 2014). By implement broad strategies based on agricultural growth, then after consider specific policy choices which encompass carefully the proper policy options as to: which policy interventions are able to opening the growth potential, which sectors have a larger expected potential linkages and what is the growth and poverty-reduction potential of these sectors and their constraints. In order to answer these questions, it is necessary to empirically identify which types of sectoral linkages are potentially available and to establish how large they