Economic Development in Ethiopia: Development Gap and the Obstacles

Economic Development in Ethiopia
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Introduction
Africa has long been termed as the source of raw materials for the rest of the world. Most of the continent's economic outlook painted quite a bleak picture of how the countries progressed. However over the past decade or two, the narrative has been changing with Africa slowly turning into the next important global economic player. Among the leaders in the economic turnaround of the continent is Ethiopia. The country has experienced a steady economic growth over the past decade, something that is a combination of several factors. This report details Ethiopia’s economic development over the last 60 years, the development gap between it and OECD countries, and the obstacles for Ethiopia to close the development gap.
Overview of Ethiopia
Ethiopia is a country on the East of the African continent, specifically located just near the horn of Africa. It is a landlocked country bordering Sudan, South Sudan, Kenya, Somalia, Djibouti and Eritrea. It is a rugged country with undulating hills and valleys, perhaps due to the passage of the Rift Valley across it. With a population of around 116 million people, Ethiopia is the second-largest country in terms of population, with only Nigeria boasting a bigger population. Over the past two decades, the country has experienced a rapid turnaround in its economic outlook, with it boasting of stable economic growth for almost ten years running. It was growing at a rate of 8.5% per annum in 2018. That, however, slowed down a bit due to the pandemic. Even though it is landlocked, the country’s strategic location has served it well.[Hauge, Jostein, and Ha-Joon Chang. "The Concept of a" Developmental State" in Ethiopia." Oxford University Press, 2019.] [Gray, Alex. "Ethiopia is Africa’s fastest-growing economy." In World Economic Forum, vol. 4. 2018.]
It is next to the Middle East, which offers a ready market for its exports, while the Middle Eastern countries offer great trading partners for the country. The country enjoys sufficient labor provision backed up with abundant natural resources with its large population. Like most African countries, the country is still heavily dependent on agriculture as the backbone of its economy, even though it is trying to diversify into other sectors of the economy. Also, like most other African nations, there seems to be quite a discrepancy between economic growth and the people's living standards, as a majority of the population is still poor. Establishing a balance between economic growth and pa capita income still remains the major challenge for the country.
60 Year History of Ethiopia
6O years ago, Ethiopia was the last proud absolute monarch under Haile Selassie. He had become the first foreign head of state to visit West Germany and was making efforts to try and bring economic and technological development back to Ethiopia. After a decade, however, unrest had begun back home, with Ethiopians starving and the economic outlook being so bleak. The unrest was so much that Haile Selassie was toppled in a coup led by Col. Mengistu Haile Mariam. Life under Mengistu, just like in other African nations that were under military rule at the time, was quite tough. There were no economic policies that could improve the lives of the people and the military rules with an iron fist. He would soon be toppled in 1991, and Meles Zenawi took the government in 1995. Under Zenawi, there were economic changes as the country shifted to democracy, even though the change was quite slow. However, during his time, the foundations for economic growth were put in place and a new economic chapter was written. He died in 2012, after which the less popular Hailemariam Desalegn took over.[McDonald, B. (2019). The Roads of Ethiopia: Italian Occupation and Mengistu's Regime. Student Works.] [Baye, Temesgen Gebeyehu. "Poverty, peasantry and agriculture in Ethiopia." Annals of Agrarian Science 15, no. 3 (2017): 420-430.]
He would soon resign after too many protests against his government and replaced by Abiy Ahmed, the current Prime Minister. Abiy has overseen a relatively peaceful country until the rise of the Tigray conflict.. However, during the past decade, it was that Ethiopia experienced rapid economic growth. As it can be seen, the economic story of Ethiopia has been held ransom by poor leadership and governance for a period spanning over 50 years. That is enough time that it took other more developed nations, such as Singapore, to rise from third world nations to industrialized ones. The country’s economic growth has dropped from 8.5%in 2018 to 6.1% due to the pandemic.[Opalo, Ken Ochieng, and Lahra Smith. "Ideology and succession politics in Ethiopia: autocratic leadership turnover and political instability." Democratization 28, no. 8 (2021): 1463-1482.] [Sanchez Martin, Miguel, Samuel Mulugeta, Zerihun Getachew, and Christina Wieser. "Ethiopia Economic Update, No. 8." (2021).]
OECD (Organization for Economic Co-operation and Development) and Ethiopia
This is a special forum consisting of around 38 countries that have come together for economic development. It was established in December 1960. These countries are market-based economies and democracies geared towards formulating a singular body of policies that will altogether work towards forging sustainable economic growth. The organisation's main goal is to come up with policies that will enhance well-being, equality, and prosperity for the citizens of all the member countries. It is headquartered in France and is chaired by a secretary-general.
The process of joining OECD is quite complicated as it involves several procedures. A state must meet the standards set in its instruments, especially when it comes to matters to do with anti-corruption, corporate governance as well as environmental protection. The ratings on these three scales must be significantly high, in addition to other aspects such as the style of leadership or governance therein. A lot of attention is usually placed on anti-corruption and democracy among the applicants for them to be admitted into the organization. The data about these elements is usually collected by the organization.[Martin, John P. "Activation and active labour market policies in OECD countries: stylised facts and evidence on their effectiveness." IZA Journal of Labor Policy 4, no. 1 (2015): 1-29.]
The organization makes decisions through consensus, where members sit down in committees to discuss and charter a way forward when certain issues arise. Some policies are also reviewed, and their impacts revised based on the prevailing conditions of members and the decisions they make in that direction as well. The member countries span all the corners of the globe, from Europe, The Pacific, Asia and the Americas. While only made up of 38 member states, the organization is responsible for around 80...