The Role of Ethiopian Medium and Large Scale Manufacturing Industries in Strengthening Rural-Urban Linkages

Abstract

Contemporary economic theory sees the manufacturing industry as a strategic tool for strengthening rural-urban linkages and for bringing overall economic development and poverty eradication. This is due to the interdependence of the rural and urban economies in developing countries. However, the Ethiopian medium and large scale manufacturing industry does not appear to be on the right track in their relationship to the agricultural sector as required by the Agricultural Development Led Industrialization [ADLI] policy. Most Ethiopian manufacturing establishments are known for their high dependence on imported raw materials and for their operating below capacity. Past studies failed to realize the potential benefits of creating production linkages by reinforcing rural-urban links across the country. The objective of this paper is to evaluate the capacity of medium and large scale manufacturing industries (MLSMIs) to forge rural-urban relationships that will assist towards achieving the goals of ADLI. The methodology for putting the paper together is by drawing results from the ongoing doctoral research^[1] by the author. That study is based on a mixed data approach using both quantitative and qualitative methods and with a questionnaire survey as the main data collection tool. The research question addressed in this paper is what role can medium and large scale manufacturing industries play to strengthen rural-urban economic linkages? There is every reason to believe that manufacturing industries have the capacity to expand their demand for local agricultural raw material. Rural areas, on the other hand, have an equally dependable appetite for agro-allied products such as fertilizers, pesticides, and farming machinery. Unfortunately, the paper finds from the study that as high as 52.7 percent of existing industries in the four case-study areas are wholly or partially dependant on imported raw materials and that only 9.9 percent appear involved in the production and supply of agricultural inputs. Strangely, however, as much as 44.6 percent of the study’s respondents chose the main reason hindering linkages as the unavailability of preferred and export quality raw materials in the local market. The paper is structured into five sections; the introduction, literature review, methodology, findings and conclusion (incorporating some suggested recommendation).

Key Words: rural-urban, forward/backward integration, interdependence, export-quality raw material, agro-allied manufacturing,

[1] Factors affecting the performance of Medium and Large Scale Manufacturing Industries in Ethiopia: Case study of selected cities in Ethiopia by the Author