Importance Of Industrialization In Ethiopia

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Industrialization has significant role in the economic development. The essential role of industrialization in an economy is as to (i) Raise income: -industrial development can provide a good basis for a rapid growth of income; (ii) fulfill the demands for the industrial products. After certain limits, the demand for people are usually of industrial goods;(iii) Raise productivity per-head (physical output per man): with a higher productivity in industry compared to agriculture, a rise in share of industry in total output raises, the average productivity of the economy as a whole.(iv) Develop economies that become nationally integrated, flexible and capable of self-generated and self-sustained growth as a source of dynamism, and it brings…show more content…
In fact, development and economic growth have several phases and aspects. But most of the countries undertake economic reforms to change economic status in their countries, commit their valuable resources to make changes. Similarly, Ethiopia has also took economic reforms, which reinforces free market and open foreign trade. The reform also focused on developing manufacturing sector which is one of the bedrock for an economy. The government of Ethiopia also develops couple of five years plans which mainly emphases transforming the agrarian economy to industrialized economy. Specially, the country has given high attention to manufacturing sector development in its recent two five years plans known as GTP I and II. GOE used to provide distinctive incentives to this sector particularly to light and agri- business manufacturing industries. These manufacturing business development was justified as the country has competitive advantage with respect to cheap labor, ample input resource availability, and good market location to the rest of the world market, low technology and investment requirement. Ethiopia has many natural resources that can provide valuable inputs for light manufacturing industries serving both domestic and export markets. Among its abundant resources are cattle, which can be processed into leather and its products; forests, which can be managed for the furniture industry; cotton, which can support the garments industry;and agricultural land and lakes, which can provide inputs for agro processing industries. Ethiopia has abundant low-cost labor, which gives it a comparative advantage in less-skilled, labor-intensive sectors such as light manufacturing. Ethiopia also shares several negative factors with other low-wage African countries, such as shortages of industrial land,
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