Navigating a world of constraints: Developmentalism, industrial policy, and the limits to structural transformation in Ethiopia

This thesis investigates the challenges surrounding structural transformation and industrial policy in 21st century peripheral countries, with a special focus on the developmental journey of Ethiopia. It provides insights into the unequalizing workings of the world economy, highlighting global core-periphery polarization and the role of technological lagging and transfers of value. The thesis discusses developmental strategies that have historically been used by late industrializing countries and examines the economic and political constraints that undermine peripheral attempts at structural transformation. Ethiopia, often hailed for its unconventional policies and impressive growth rates, serves as a case study to analyze how a poor country navigates the complexities of developmental constraints in its quest for economic development. Based on an in-depth literature review and 12 semi-structured interviews conducted in Ethiopia and online between October and December 2022, the thesis finds that, despite targeted efforts and remarkable progress, structural transformation in Ethiopia has been hindered by a complex interplay of internal and external pressures and constraints. These include a lack of credit for the manufacturing sector, difficulties in acquiring technological capabilities, limited success in creating linkages and fostering import substitution and export growth, political and ethnic grievances, foreign exchange shortages, external debt, and pressure from international financial institutions. Ultimately, the thesis discusses how Ethiopia's economic struggles and the failure to achieve structural transformation have led to the adoption of neoliberal policies, raising questions about the future of interventionist industrial policy in the country.