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Structural change and poverty reduction in Ethiopia: Economy-wide analysis of the evolving role of agriculture

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  • Dorosh, Paul
  • Thurlow, James
  • Kebede, Frehiwot Worku
  • Ferede, Tadele
  • Taffesse, Alemayehu Seyoum

Abstract

This paper explores these issues for Ethiopia utilizing an economy-wide computable general equilibrium (CGE) model based on a detailed social accounting matrix (SAM). We present the results of four alternative investment scenarios -- faster investment in i) cities; ii) crop agriculture; iii) the rural non-farm sector and agro-industry; and iv) livestock. The simulations suggest that investments in cities generate faster economic growth and structural transformation. However, given the large share of the population with incomes linked to agriculture and the rural economy, investments in the rural economy are likely to continue to be more pro-poor than urban public investments through the mid-2020s. After the mid-2020s, investments in cities become more pro-poor. In short, though rapid economic growth and structural transformation have diminished the relative importance of the agricultural sector in Ethiopia’s economy, continued public investments in agriculture and the broader agri-food system remain crucial for equity and poverty alleviation in Ethiopia, as well as for reducing food import dependency.

Suggested Citation

  • Dorosh, Paul & Thurlow, James & Kebede, Frehiwot Worku & Ferede, Tadele & Taffesse, Alemayehu Seyoum, 2018. "Structural change and poverty reduction in Ethiopia: Economy-wide analysis of the evolving role of agriculture," ESSP working papers 123, International Food Policy Research Institute (IFPRI).
    • Handle: RePEc:fpr:esspwp:123
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    References listed on IDEAS

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    1. Schmidt, Emily & Dorosh, Paul A. & Kedir Jemal, Mekamu & Smart, Jenny, 2018. "Synopsis: Ethiopia's spatial and structural transformation: Public policy and drivers of change," ESSP research notes 72, International Food Policy Research Institute (IFPRI).
    2. Diao, Xinshen & Thurlow, James & Benin, Samuel & Fan, Shenggen, 2012. "Strategies and priorities for African agriculture: Economywide perspectives from country studies," IFPRI books, International Food Policy Research Institute (IFPRI), number Xinshen Diao, February.
    3. Pedro M. G. Martins, 2018. "Structural change in Ethiopia," Development Policy Review, Overseas Development Institute, vol. 36(S1), pages 183-200, March.
    4. repec:fpr:ifprib:xinshendiao is not listed on IDEAS
    5. Paul Dorosh & James Thurlow, 2012. "Agglomeration, Growth and Regional Equity: An Analysis of Agriculture- versus Urban-led Development in Uganda," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 21(1), pages 94-123, January.
    6. Dorosh, Paul A. & Rashid, Shahidur, 2013. "Food and agriculture in Ethiopia: Progress and policy challenges," Issue briefs 74, International Food Policy Research Institute (IFPRI).
    7. J. Vernon Henderson & Hyoung Gun Wang, 2005. "Aspects of the rural-urban transformation of countries," Journal of Economic Geography, Oxford University Press, vol. 5(1), pages 23-42, January.
    8. Paul S. Armington, 1969. "A Theory of Demand for Products Distinguished by Place of Production (Une théorie de la demande de produits différenciés d'après leur origine) (Una teoría de la demanda de productos distinguiénd," IMF Staff Papers, Palgrave Macmillan, vol. 16(1), pages 159-178, March.
    9. International Monetary Fund, 2013. "The Federal Democratic Republic of Ethiopia: 2013 Article IV Consultation," IMF Staff Country Reports 2013/308, International Monetary Fund.
    10. International Monetary Fund, 2013. "Lao People's Democratic Republic: Staff Report for the 2013 Article IV Consultation," IMF Staff Country Reports 2013/369, International Monetary Fund.
    11. Bachewe, Fantu N. & Berhane, Guush & Minten, Bart & Taffesse, Alemayehu S., 2018. "Agricultural Transformation in Africa? Assessing the Evidence in Ethiopia," World Development, Elsevier, vol. 105(C), pages 286-298.
    12. Schmidt, Emily & Dorosh, Paul A. & Kedir Jemal, Mekamu & Smart, Jennifer, 2018. "Ethiopia's spatial and structural transformation: Public policy and drivers of change," ESSP working papers 119, International Food Policy Research Institute (IFPRI).
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    Cited by:

    1. World Bank, 2020. "Ethiopia Poverty Assessment," World Bank Publications - Reports 33544, The World Bank Group.

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