EDRI jan 13 2011

8/8/2019 EDRI jan 13 2011

1/25

Some key challenges for Ethiopia:

An outside perspective

Lawrence Haddad

Institute of Development Studies

January 2011, Addis Ababa

8/8/2019 EDRI jan 13 2011

2/25

Four questions

How important is agriculture for Ethiopias

future economic growth?

From growth to poverty reduction: is Ethiopia

going to be more like China or India?

Can large scale public works projects help

generate growth?

How can relationships between state and civilsociety be strengthened?

8/8/2019 EDRI jan 13 2011

3/25

Question 1

How important is agriculture for Ethiopias

future economic growth?

8/8/2019 EDRI jan 13 2011

4/25

Annual GDP/capita growth, 5 year averages (%)

-0.50

1.81

2.98

6.19

-1.45

0.7

1.97

3.04

1991-95 1996-00 2001-05 2006

Ethiopia SSA weighted average

Source: A.K. Fosu. CESifo Forum 2010. WIDER.

8/8/2019 EDRI jan 13 2011

5/25

Structural Composition of Economy (%)

4844

1412

38

44

2003-4 2008-9

Agriculture Industry Services

African Development Bank Group.

Economic Brief. Sept 2010.

8/8/2019 EDRI jan 13 2011

6/25

Sectoral growth rate, annual (%)

16.9

6.4

11.6

9.9

6.3

14

2003-4 2008-9

Agriculture Industry Services

African Development Bank Group.

Economic Brief. Sept 2010.

8/8/2019 EDRI jan 13 2011

7/25

Increase in marginal productivity of smallholders

is possible

1.39

1.981.67

2.281.97

3.55

yield (tons/ha)

wheat

yield (tons/ha)

maize

Smallholders without fertilizer

Smallholders with fertilizer

large farms

0 0

0.155

0.181

0.147

0.225

total fertilizer

(tons/ha) wheat

total fertilizer

(tons/ha) maize

Smallholders without fertilizer

Smallholders with fertilizer

large farms

Source: Mellor and Dorosh 2010

8/8/2019 EDRI jan 13 2011

8/25

Total area cultivated by farm size (Ha) and

agro-ecology, 2007/8

Source: Mellor and Dorosh 2010

8/8/2019 EDRI jan 13 2011

9/25

GoE spending on agriculture

8/8/2019 EDRI jan 13 2011

10/25

8/8/2019 EDRI jan 13 2011

11/25

Question 2

From growth to poverty reduction: is Ethiopia

going to be more like China or India?

8/8/2019 EDRI jan 13 2011

12/25

Ethiopia has a history of doing relatively well at

converting growth into poverty reduction

0

0.5

1

1.5

2

2.5

Growth-poverty gap elasticity 1977-2004

Growth-poverty gap elasticity 1977-2004

Source: Fosu. 2008. WIDER Research Paper No. 2008/107. Inequality and the Impact of Growth onPoverty: Comparative Evidence for Sub-Saharan Africa

8/8/2019 EDRI jan 13 2011

13/25

One of the Top MDG performers

Source: Leo and Barmier 2010

8/8/2019 EDRI jan 13 2011

14/25

Mixed results across various poverty

measures, Ethiopia

Source: Oxford Poverty and Human Development

Initiative 2010. Ethiopia Country Briefing.

8/8/2019 EDRI jan 13 2011

15/25

H o o e e o o la io i oo e e e i ie .

Com a i o o Ho e ol S ve a FAO e ima e

76 75 7371

60

51

45 44 44

37

44

66

32

45

63

15

31

43 43

21

Ho e ol S ve FAO

Source: From Data in IFPRI Research Report 146 2006. Smith, Alderman and Aduayom

8/8/2019 EDRI jan 13 2011

16/25

Simulations of Poverty Headcounts driven by growth

under different distributional assumptions

0

5

10

15

20

25

30

35

40

45

50

2000 2001 2002 2003 2004 2005 2006

Poverty Headcount with Distributionally neutral Growth

Poverty Headcount with Equally Distributed Growth

Source: Alemayehu Geda, Abebe Shimeles, John Weeks. JID. 2008

8/8/2019 EDRI jan 13 2011

17/25

Question 3

Can large scale public works projects help

generate growth?

8/8/2019 EDRI jan 13 2011

18/25

Productive Safety net Programme, impacts on food security and

non-farm own business activity, first 18 months

Impact PW vs NPW Daily per capita calorieacquisition in last 7 days

More likely to participate

in non-farm own-business

activity?

Average impact of any

receipt of PW transfers

Increase, but not

statistically significant

Positive and significant

Source: Gilligan, Hoddinott, Taffesse, Dec 2008, IFPRI

8/8/2019 EDRI jan 13 2011

19/25






activity?



Increase, but not



Average impact of PW

transfers of at least 90

Birr per household

member

Increase, but not




8/8/2019 EDRI jan 13 2011

20/25






activity?



Increase, but not



Average impact of PW

transfers of at least 90

Birr per household

member

Increase, but not



Average joint impact of

PW and Other Food

Security Transfers

Increase, statistically

significant

Positive, not significant


8/8/2019 EDRI jan 13 2011

21/25

Question 4

How can relationships between state and civil

society be strengthened?

8/8/2019 EDRI jan 13 2011

22/25

Contesting resource allocations

Are PSNP resources allocated politically? Human Rights Watch says yes.

Gilligan and Hoddinott 2004, analysing household data from nine villages

which received food aid in the aftermath of an agricultural drought in

2002, found that:

Having a father who was considered important in the social life of the village increased

the likelihood of access to [public works] by about 10 per cent, and having a relative whoheld an official position of some sort within the kebele increased the likelihood of

obtaining gratuitous relief by about the same amount.

2006 study by Gilligan et. al. Political allocations tend to be specific to local

power struggles in some areas, rather than any systematic use of the

targeting system for political ends (Farringdon, Sharp and Sjoblom 2007).

But when PSNP resources are allocated within food insecure woredas

served by the PSNP using a mix of administrative guidelines and

community knowledge (Gilligan et, al. 2008) this is inviting second-

guessing.

8/8/2019 EDRI jan 13 2011

23/25

Increasing domestic resource mobilisation

0

2

4

6

810

12

14

2008-9 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

Tax revenue as a percent of GDP

Tax revenue as a percent of GDP

November 2010. IMF Country Report No. 10/339

8/8/2019 EDRI jan 13 2011

24/25

Monitoring

commitment

to hunger

reduction

Ethiopia, ranked

18 out of 29

Source: actionaid 2010

8/8/2019 EDRI jan 13 2011

25/25

Four questions. Conclusions How important is agriculture for Ethiopias future economic

growth? Old agriculture no, new agriculture, yes. All acrossthe size scale.

From growth to poverty reduction: is Ethiopia going to bemore like China or India? More like China (?) but watchincome distribution and non-income dimensions of poverty

Can large scale public works projects help promote growth?Not clear

How can relationships between state and civil society bestrengthened? Negotiation over taxes, commitmentmonitoring, service delivery accountabilitymechanisms, collect data for transparent allocationmechanisms

EDRI jan 13 2011

Documents