Theoretical Literature Review: Industrialization In Ethiopia

Chapter 2

2. LITERATURE REVIEW

2.1 Theoretical literature review

2.1 .1 Industrialization in Ethiopia

Ethiopia’s Growth and Transformation Plan seeks to transform the economy from a predominantly agrarian to a modern and industrialized economy. The GTP seeks to transform Ethiopia to an industrialized economy and increase the per capita income of its citizens to middle-income levels by2025. To bundle efforts and facilitate this transformation the Government puts special focus on five sectors thought to maximize the country’s endowment and comparative advantage in the manufacturing sector: textiles and garments; leather and leather products; sugar and related products; cement; and the metal and engineering industries (Yodit, 2015). But the GTP has not been able to foster and accelerate structural transformation of the economy and the share of the manufacturing sector in GDP remained stable at a rather low level. In fact, Ethiopia’s past high growth decade has been fueled by large services and agricultural sectors. Economic growth averaged 10.9 percent per year from 2003/04to 2013/2014 compared to the regional SSA average of 5.4 percent. The manufacturing sector has grown at an average of10 Percent in last decade—about the same rate of expansion as real GDP—thereby falling short of the targeted 22 percent in the GTP. In 2013/14 the three sector shares in GDP were: 40.2 percent (agriculture), 45.5 percent (services), and 14.3 percent (industry).The low