Industry and Industrialization in Ethiopia: Policy Dynamics and Spatial Distributions

Abstract

This study explored the formulation and implementation of industrial policy under the successive regimes of Ethiopia and the sectors inter-regional and intra-regional distribution. To this end, a mixed research approach is pursued in the analysis of the primary and secondary data. The study revealed that, industrial policy formulation in Ethiopia has undergone several changes across the regimes. The industrial policy menu and practice at one time or another consisted of market-oriented development (under the Imperial era and EPRDF regime), public oriented (under Dergue), foreign dominating industrialization (under Imperial Regime), domestic ownership (Under EPRDF), and import Substitution Vs export promotion (under all regimes).  The study indicated that industrial policy formulation and execution in Ethiopia is pragmatic that is not obsessed with a particular development ideology. At national level, under the incumbent regime, the output and the number of establishments increased rapidly though below the expectation of the government. The large and medium manufacturing industries are not equally distributed across regions.  The ‘‘developed regions’’ achieved an increasing share of industrial development while the ‘‘peripheral regions’’ lagged behind. Notwithstanding its dominance in major industrial establishments, the share of Addis Ababa City Administrations is decreasing over years though still serve as industrial hub of the country. There is significant disparities among and within regions in  the number of people engaged in the sector, wages and salaries paid to workers, the fixed assets possessed by the sector and, the sector`s  contribution to national income account and capital expenditure.  This   difference is primarily driven by difference in the productivity of the private sector in each region. Constraints related to accesses to land and finance and competition from informal sector affect each region to a different degree. There are striking differences among urban areas of the same regions.  Cities that are the seat of the regional governments and their surrounding environs serve as centres of industrialization for their own respective region.

Key words: Industry, Industrial policy, region, spatial distribution