Ethiopia - Future trends

Despite the pervasive poverty, marginal growth rates, and tumultuous political and economic history of Ethiopia, there are several signs indicative of hope and improvement. For the first time in the country's history, for instance, an effective democracy has been institutionalized. While this will most certainly not solve Ethiopia's deeply embedded economic difficulties overnight, it is, if nothing else, a huge step forward in the direction of the establishment of a responsive and stable government. Moreover, the economy has experienced an unprecedented degree of stability since the mid-1990s, though this is, admittedly, counterbalanced by a precarious agricultural dependence and a chronic balance of payments deficit.

While there are undeniably positive developments, there remain severe impediments that prevent the assurance of a sustained path towards economic development. Perhaps the most significant question that the Ethiopian government must address is the specific policy framework that must be implemented over an extended period of time to surmount these impediments. Privatization and the absolute rule of the free market currently reign supreme in the international neo- liberal economic environment. Rather than accepting the virtues of neo-liberal ideology at face value, however, Ethiopia must adopt policies that are relevant to its particular circumstances. To its credit, this is precisely what the EPRDF seem to be doing. Though the government has pursued policies of trade liberalization, they have not promoted unobstructed free trade. Similarly, while many state-owned enterprises have been privatized, the government retains a considerable role in certain areas of the economy, such as telecommunications, infrastructure provision, and electricity. Moreover, foreign dominance, which can be nationally unprofitable, has been entirely excluded from certain segments of the economy, such as the finance sector. The EPRDF must continue along this path, withstanding international pressure to create a complete free market economy that may not be appropriate at this stage of Ethiopia's economic development.

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Nov 17, 2011 @ 9:09 am
I need regular updates on economic issues, monetary policy review issues and trends in the capital market of Ethiopia. I also need to know the best industries to invest in at the moment.

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