The pattern of Growth, Poverty and Inequality in Ethiopia: Which way for a pro-poor Growth?

Course ID
Ethiopian Economics Association (EEA)
Aleayehu Geda

Understanding the growth processes, its determinants as well as its linkage with poverty and inequality in Ethiopia is not only of academic interest but also of critical importance for policymaking. This study attempts to unravel the factors behind the poor growth performance in Ethiopia so as to inform policy making. This will be mapped with the condition of poverty in the country. We then attempt to link growth with poverty and inequality so as to come up with an idea of a pro-poor growth strategy.
Ethiopia is one of the countries in Sub-Saharan Africa where sustained and meaningful economic growth has eluded the macro economic statistics for a long time. The country suffered tremendous social upheavals, war, and natural calamities over the last three decades. The only time it got respite from the adversities of war and drought was in the 1990s (notwithstanding the last two years of the decade), where, it was able to register impressive recovery and growth, which raised hope and expectations of a brighter future. Much has been achieved since 1992 in terms of economic fundamentals. But, poverty, deprivation and disease undermine any progress that may have been made in social, economic and political spheres. The per capita GDP, standing at barely 100USD for much of the 1990s is less than one-third of the international poverty line used by the World Bank to define absolute poverty. Therefore, Ethiopia faces the challenge of promoting economic growth aimed at reducing poverty. The truth being that economic growth is a necessary, but not a sufficient condition for reducing poverty. In fact, the link is not as direct and sharp as one would have hoped it to be. There are several intervening factors that work both forwards and backwards in the linkage between economic growth and poverty at the conceptual as well as empirical level.
Poverty reduction being the core objective of the Ethiopian government, it is crucial to have as much clarity as possible on the interactions between poverty reduction and economic growth in Ethiopia and the policy lessons that may arise from such knowledge. Some of the fundamental questions that one would like to raise include: what are the mechanisms and conditions by which economic growth translates into poverty reduction? and also how Does existing poverty and inequality condition affect the prospect for sustained and rapid economic growth? In particular, understanding the link across economic growth, income distribution and poverty both in the short and long term provides a clue as to what a pro-poor growth strategy should be.
The rest of the study is organized as follows. Section II attempts to investigate the pattern of growth and the macroeconomic context by examining the growth performance in the past four decades. It begins by providing an analytical framework that informs the strategy of a pro-poor growth. Then, it will outline the most important episodes of growth across the three regimes of recent history. Subsections that will deal with growth accounting and structural change will follow this. An attempt to understand the source of growth using cross-country, time-series and micro data based models will also be made. Section III will review the condition of poverty in Ethiopia. It then attempts to link growth with issue of poverty and inequality. Section IV will conclude the study

Corporate Author: Ethiopian Economic Association/Ethiopian Economic Policy Research Institute
Publisher: Ethiopian Economic Association (EEA)
Primary Descriptors: Poverty ;Equality

Secondary Descriptor: Income distribution ; Economic development

Geographic Descriptors: Ethiopia
Cataloge Date: 02/27/2013
Broad Subject heading: SOCIAL SECTOR ISSUES
Call Number: 330.963 PRO 2004
Serial Key Title: Proceedings of the First International Conference on the Ethiopian Economy
Publication catagory: International Conference
Content type: EEA Publication
Volume: III
Publication date: 2013-05-27 23:04:00
Forum or Discussion date: 2013-02-27 14:55:42
Place of publication: Addis Ababa, Ethiopia
Type of material: Book
Current frequency: Annualy
Author: Aleayehu Geda, Abebe Shimeles et al.