IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp15846.html

Political Economy of Industrialization and Industrial Parks in Ethiopia

Author

Listed:
  • Kebede, Selamawit G.

    (University of Addis Ababa, Ethiopia)

  • Heshmati, Almas

    (University of Economics Ho Chi Minh City)

Abstract

This study investigates the political economy of industrialization in Ethiopia. It discusses the economic and political institutions during three political regimes and assesses the industrial sector's performance across these different regimes. Further, it evaluates the different industrial strategies and organizational structures for implementing the industrial policies together with the current industrial park strategy and its contemporary impact on employment creation, export promotion, foreign exchange revenues, the value chain, and spillover effects. Both qualitative and quantitative approaches are used for exploring the role of political economy in Ethiopian industrialization. Different political strategies were followed by the political regimes to support the industrial sector. The paper distinguishes between two extreme political strategies of protectionist import substitution industrialization and the outward strategy of export-oriented industrialization. The study confirms that political institutions negatively impacted industry for several decades. The results support focusing on institutions to successfully implement industry policies for inducing the industrialization process in the country. Policies must be implemented considering existing opportunities and resources in the country along with their respective economic outcomes instead of excessive priority being given to the political interests of the regime in power.

Suggested Citation

  • Kebede, Selamawit G. & Heshmati, Almas, 2023. "Political Economy of Industrialization and Industrial Parks in Ethiopia," IZA Discussion Papers 15846, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp15846
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp15846.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Jörg MAYER, 2004. "Industrialization In Developing Countries: Some Evidence From A New Economic Geography Perspective," UNCTAD Discussion Papers 174, United Nations Conference on Trade and Development.
    2. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
    3. Tu-Anh Vu-Thanh, 2014. "The Political Economy of Industrial Development in Vietnam: Impact of State-Business Relationship on Industrial Performance, 1986-2012," WIDER Working Paper Series wp-2014-158, World Institute for Development Economic Research (UNU-WIDER).
    4. Vu-Thanh, Tu-Anh, 2014. "The political economy of industrial development in Vietnam: Impact of state-business relationship on industrial performance, 1986-2012," WIDER Working Paper Series 158, World Institute for Development Economic Research (UNU-WIDER).
    5. By Albert G. Schweinberger & Jens Suedekum, 2015. "De-industrialization and entrepreneurship under monopolistic competition," Oxford Economic Papers, Oxford University Press, vol. 67(4), pages 1174-1185.
    6. Becker, Sascha O. & Egger, Peter H. & Seidel, Tobias, 2009. "Common political culture: Evidence on regional corruption contagion," European Journal of Political Economy, Elsevier, vol. 25(3), pages 300-310, September.
    7. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(2), pages 407-443.
    8. Robert H Bates & Steven Block, 2018. "Political institutions and economic growth in Africa’s ‘Renaissance’," Oxford Economic Papers, Oxford University Press, vol. 70(2), pages 327-352.
    9. Barro, Robert J, 1996. "Democracy and Growth," Journal of Economic Growth, Springer, vol. 1(1), pages 1-27, March.
    10. Muhammad Zakaria & Bashir Ahmed Fida, 2009. "Democratic Institutions and Variability of Economic Growth in Pakistan: Some Evidence from the Time-series Analysis," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 48(3), pages 269-289.
    11. Mr. Ramana Ramaswamy & Mr. Bob Rowthorn, 1997. "Deindustrialization: Causes and Implications," IMF Working Papers 1997/042, International Monetary Fund.
    12. Adam Przeworski & Fernando Limongi, 1993. "Political Regimes and Economic Growth," Journal of Economic Perspectives, American Economic Association, vol. 7(3), pages 51-69, Summer.
    13. Ana Paula F. Mendes & Mário Augusto Bertella & Rudolph F. A. P. Teixeira, 2014. "Industrialization in Sub-Saharan Africa and import substitution policy," Brazilian Journal of Political Economy, Center of Political Economy, vol. 34(1), pages 120-138.
    14. Aron, Janine, 2000. "Growth and Institutions: A Review of the Evidence," The World Bank Research Observer, World Bank, vol. 15(1), pages 99-135, February.
    15. Adelman, Irma, 1999. "The Role Of Government In Economic Development," CUDARE Working Papers 25039, University of California, Berkeley, Department of Agricultural and Resource Economics.
    16. Mehdi SHAFAEDDIN, 1998. "How Did Developed Countries Industrialize? The History Of Trade And Industrial Policy: The Cases Of Great Britain And The Usa," UNCTAD Discussion Papers 139, United Nations Conference on Trade and Development.
    17. Ken Warwick, 2013. "Beyond Industrial Policy: Emerging Issues and New Trends," OECD Science, Technology and Industry Policy Papers 2, OECD Publishing.
    18. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(2), pages 407-437.
    19. Kassahun Berhanu & Colin Poulton, 2014. "The Political Economy of Agricultural Extension Policy in Ethiopia: Economic Growth and Political Control," Development Policy Review, Overseas Development Institute, vol. 32(s2), pages 199-216, September.
    20. James A. Robinson & Daron Acemoglu, 2000. "Political Losers as a Barrier to Economic Development," American Economic Review, American Economic Association, vol. 90(2), pages 126-130, May.
    21. Michaël Bonnal & Mehmet E. Yaya, 2015. "Political Institutions, Trade Openness, and Economic Growth: New Evidence," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 51(6), pages 1276-1291, November.
    22. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    23. Joseph E. Stiglitz, 1999. "More instruments and broader goals: moving toward the Post-Washington Consensus," Brazilian Journal of Political Economy, Center of Political Economy, vol. 19(1), pages 101-128.
    24. Thomas Farole, 2011. "Special Economic Zones in Africa : Comparing Performance and Learning from Global Experience," World Bank Publications - Books, The World Bank Group, number 2268, April.
    25. Altenburg, Tilman, 2010. "Industrial policy in Ethiopia," IDOS Discussion Papers 2/2010, German Institute of Development and Sustainability (IDOS).
    26. Michael Peneder & Gerhard Streicher, 2018. "De-industrialization and comparative advantage in the global value chain," Economic Systems Research, Taylor & Francis Journals, vol. 30(1), pages 85-104, January.
    27. Daron Acemoğlu & James A. Robinson, 2016. "Paths to Inclusive Political Institutions," Studies in Economic History, in: Jari Eloranta & Eric Golson & Andrei Markevich & Nikolaus Wolf (ed.), Economic History of Warfare and State Formation, pages 3-50, Springer.
    28. Saleman, Yannick & Jordan, Luke, 2014. "The implementation of industrial parks : some lessons learned in India," Policy Research Working Paper Series 6799, The World Bank.
    29. Daron Acemoglu, 2007. "Introduction to Modern Economic Growth," Levine's Bibliography 122247000000001721, UCLA Department of Economics.
    30. Cáceres, Luis René, 2017. "Deindustrialization and economic stagnation in El Salvador," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    31. Robert Deacon, 2009. "Public good provision under dictatorship and democracy," Public Choice, Springer, vol. 139(1), pages 241-262, April.
    32. Rajah Rasiah & Nazia Nazeer, 2016. "Comparing Industrialization in Pakistan and the East Asian Economies," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 21(Special E), pages 167-192, September.
    33. Moberg, Lotta, 2015. "The political economy of special economic zones," Journal of Institutional Economics, Cambridge University Press, vol. 11(1), pages 167-190, March.
    34. Acemoglu, Daron & Johnson, Simon & Robinson, James A., 2005. "Institutions as a Fundamental Cause of Long-Run Growth," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 6, pages 385-472, Elsevier.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Elias Papaioannou & Gregorios Siourounis, 2008. "Democratisation and Growth," Economic Journal, Royal Economic Society, vol. 118(532), pages 1520-1551, October.
    2. Erdogdu, Erkan, 2013. "A cross-country analysis of electricity market reforms: Potential contribution of New Institutional Economics," Energy Economics, Elsevier, vol. 39(C), pages 239-251.
    3. Celal Kucuker, 2003. "Türkiye Ýktisat Kongresi Büyüme Stratejileri Çalýþma Grubu," Working Papers 2003/5, Turkish Economic Association.
    4. Michael Kremer & Jack Willis & Yang You, 2021. "Converging to Convergence," NBER Chapters, in: NBER Macroeconomics Annual 2021, volume 36, pages 337-412, National Bureau of Economic Research, Inc.
    5. Hatice KÜÇÜKKAYA, 2017. "EUREFE’17 International Conference," Turkish Economic Review, KSP Journals, vol. 4(3), pages 343-344, September.
    6. Wafa Ghardallou & Dorsaf Sridi, 2020. "Democracy and Economic Growth: a Literature Review," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 11(3), pages 982-1002, September.
    7. Lim, Jamus Jerome & Adams-Kane, Jonathon, 2008. "Institutions, Education, and Economic Performance," MPRA Paper 11800, University Library of Munich, Germany.
    8. Eriṣ, Mehmet N. & Ulaṣan, Bülent, 2013. "Trade openness and economic growth: Bayesian model averaging estimate of cross-country growth regressions," Economic Modelling, Elsevier, vol. 33(C), pages 867-883.
    9. Andrey GNIDCHENKO, 2011. "Defragmentation Of Economic Growth With A Focus On Diversification: Evidence From Russian Economy," Theoretical and Practical Research in the Economic Fields, ASERS Publishing, vol. 2(1), pages 44-80.
    10. Polterovich, Victor & Popov, Vladimir, 2007. "Демократизация И Экономический Рост [Democratization and Economic Growth]," MPRA Paper 23012, University Library of Munich, Germany.
    11. Slesman, Ly & Baharumshah, Ahmad Zubaidi & Ra'ees, Wahabuddin, 2015. "Institutional infrastructure and economic growth in member countries of the Organization of Islamic Cooperation (OIC)," Economic Modelling, Elsevier, vol. 51(C), pages 214-226.
    12. Polterovich, Victor & Popov, Vladimir, 2007. "Democratization, Quality of Institutions and Economic Growth," MPRA Paper 19152, University Library of Munich, Germany.
    13. Aslý YENÝPAZARLI, 2017. "Economic freedom and effects on economic growth: A time series analysis for Turkey," Turkish Economic Review, KSP Journals, vol. 4(3), pages 345-351, September.
    14. Erdogdu, Erkan, 2013. "Essays on Electricity Market Reforms: A Cross-Country Applied Approach," MPRA Paper 47139, University Library of Munich, Germany.
    15. Jian-Guang Shen, 2002. "Democracy and growth: An alternative empirical approach," Development and Comp Systems 0212002, University Library of Munich, Germany.
    16. Delgado, Michael S. & McCloud, Nadine & Kumbhakar, Subal C., 2014. "A generalized empirical model of corruption, foreign direct investment, and growth," Journal of Macroeconomics, Elsevier, vol. 42(C), pages 298-316.
    17. Rok Spruk & Mitja Kovac, 2018. "Inefficient Growth," Review of Economics and Institutions, Università di Perugia, vol. 9(2).
    18. R Burger & S du Plessis, 2011. "Examining the Robustness of Competing Explanations of Slow Growth in African Countries," Studies in Economics and Econometrics, Taylor & Francis Journals, vol. 35(3), pages 21-47, December.
    19. Amit Nandan & Hrushikesh Mallick, 2022. "Do growth-promoting factors induce income inequality in a transitioning large developing economy? An empirical evidence from Indian states," Economic Change and Restructuring, Springer, vol. 55(2), pages 1109-1139, May.
    20. Ceyhun Haydaroglu, 2015. "The Relationship between Property Rights and Economic Growth: an Analysis of OECD and EU Countries," DANUBE: Law and Economics Review, European Association Comenius - EACO, issue 4, pages 217-239, December.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp15846. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Mark Fallak (email available below). General contact details of provider: https://edirc.repec.org/data/izaaalu.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.