AGRICULTURAL DEVELOPMENT LED INDUSTRIALIZATION IN ETHIOPIA: STRUCTURAL BREAK ANALYSIS

Year 2019, Volume: 3 Issue: 1, 193 - 201, 18.06.2019

Ahmed Kasim Dube Wasiu Olayinka Fawole Ramu Govindasamy Burhan Özkan

Abstract

The Ethiopian economy is heavily
dependent on agriculture. Unlike other emerging African countries, Ethiopian
economic growth is driven mostly by public investments in infrastructure and
agricultural productivity improvement. However, the performance of agriculture
was not satisfactory as poverty remained. Lack of appropriate policies and
strategies was considered as the ultimate reason for the sector’s past
stagnation. Consequently, to solve this problem and promote agricultural and
economic growth, government a national development strategy called Agricultural
Development Led Industrialization (ADLI). While, ADLI argues for a mutually
re-enforcing transformation of agriculture and industry, the primary goal of ADLI
was to alleviate absolute poverty.  The
strategy was also complemented by different plans so as to empower industrial
sector in addition to agriculture. Therefore, ADLI policy’s effectiveness was
tested with Structural Break Analysis. The results showed that there was
structural break in economic growth in 2004, indicating a higher and steady
growth afterwards. The descriptive results also showed that agricultural sector
remained the dominant contributor to the GDP growth of the country with only
recently that the service sector is outperforming agricultural sector. The
contribution of the industrial sector remained low, even though recently it
started performing well.

Keywords

ADLI, Structural Break, Zivot-Andrew, Bai-Perron, Ethioppia

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