Country Economic Memorandum
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Publication
Ethiopia’s Great Transition: The Next Mile - A Country Economic Memorandum
(Washington, DC : World Bank, 2022-06-17)Ethiopia’s rapid growth over the past two decades has resulted in a surge in income per capita levels, with the country approaching fast the middle-income milestone. Over the past decade, fast growth was driven by capital accumulation, but the extent to which this growth has been equally distributed is unclear. Public infrastructure spending accelerated dramatically in the first half of the 2010s, helping underpin fast economic growth. However, this approach seems to have had important shortcomings. Contrary to the findings of World Bank (2015) which examined an earlier period, total factor productivity (TFP) declined during 2011-2020, contributing negatively to growth. In addition, inequality at the household level increased between 2011 and 2016. Finally, macroeconomic imbalances have widened, a trend exacerbated by recent shocks. This report discusses the drivers of growth in Ethiopia and, in the absence of official subnational gross domestic product (GDP) figures, examines whether there has been convergence in economic activity at the subnational level. -
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Economic Geography Analysis
(World Bank, Washington, DC, 2021-06-21)This background note analyzes the economic geography of the Horn of Africa using the framework of the 2009 Word Development Report. For the purpose of this report, the Horn of Africa (henceforth HoA) comprises of five countries: Djibouti, Eritrea, Ethiopia, Kenya and Somalia. This note first seeks to provide a descriptive snapshot of recent socio-economic trends in the HoA countries vis-à-vis the regional trends in sub-Sahara Africa (SSA) as a whole. Second, it sheds light on the economic geography of the HoA region with a particular focus on 3D (density, distance, and division). Inparticular, this note highlights that borderlands of the HoA countries suffer from a combination of low density and high distance that hinders theborderlands from tapping their full economic potential. It finally concludes with a set of policy recommendations for removing barriers to sustainable growth in the region. -
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Horn of Africa Regional Economic Memorandum: Overview
(World Bank, Washington, DC, 2021-06-21)The objective of this Regional Economic Memorandum (REM) is to strengthen the economic analysis available to policymakers on the challenges and opportunities for regional economic integration to support job creation and economic transformation in the Horn of Africa. It assesses the current state of regional economic integration, how policies and investments can deepen this integration, and how this could help to address the opportunities and challenges confronting the region. The analysis applies both an economic geography perspective (based on the 3Ds framework of the 2009 WDR – density, distance, and division) and the lens of the jobs and economic transformation (JET) agenda, whilst taking into account fragility and conflict and the region’s complex and evolving political economy. This overview synthesizes the key findings of the analysis conducted for the HoA REM, full details of which are presented in a series of Background Papers. The overview briefly describes key aspects of the region’s economy and development progress (Section 2). Next, in Section 3, it presents features of the economic geography of the region and some key results from economic modeling and transport connectivity analysis. The findings demonstrate the salience of the JET agenda in the Horn, and this and its implications are discussed in Section 4. Finally, Section 5 concludes by highlighting the main policy messages which emerge from the REM’s regional-level analysis. -
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Jobs in the Horn of Africa: Synoptic Brief
(Washington, DC: World Bank, 2021-06-21)This note provides an overview of labor markets and job outcomes in the Horn of Africa. This background note was prepared for the Horn of Africa Regional Economic Memorandum. It provides an overview of issues related to jobs in the five countries of the region, Djibouti, Eritrea, Ethiopia, Kenya, and Somalia. It first discusses labor market characteristics, notably labor force participation, unemployment and underemployment,as well as demographics of the labor force. Secondly, it compares employment patterns, focusing on the type and sector of employment. Finally, it looks at the limited information available on jobs outcomes – notably, wage levels. It seeks to provides a relatively succinct synoptic summary of the common trends among the five countries as well as some distinct features. With the exception of Eritrea, the World Bank has recently analyzed jobs outcomes in all countries of the region. -
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Overview of Digital Development in the Horn of Africa
(World Bank, Washington, DC, 2021-06-21)This paper follows the World Bank Group’s approach to Jobs and Economic Transformation (JET) which identifies economic transformation as key to creating more and better jobs. It builds on the Digital Economy for Africa (DE4A) approach to developing a digital economy to create the jobs of the future, which is aligned with the African Union’s Digital Transformation Strategy, 2020-2030. Helping countries build new digital This section is prepared in the context of Covid-19 pandemic that threatens decades of hard-won development gains and is likely to have triggered the deepest global recession since the World War II. The economic crisis is generating massive unemployment, particularly affecting the poor and vulnerable, and highlights the importance of jobs and economic transformation. The HoA countries already faced the challenge of a population growth at a rate around 3% preinfrastructure, and to develop regulations, skills and platforms that are compatible with neighboring countries should enable them to develop a larger and more efficient digital market that can facilitate economic transformation by enabling technological leapfrogging, and the creation of new jobs in old and new sectors. New forms of market connectivity can bring opportunities for new services and regional economic development in the Horn of Africa. -
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Infrastructure and Structural Change
(World Bank, Washington, DC, 2021-06-21)Access to infrastructure support economic development through both capital accumulation and structural transformation. This paper investigates the links between investments in electricity, Internet, and road infrastructure, in isolation and bundled, and economic development in the Horn of Africa, a region that includes countries with different levels of infrastructure and economic development. Using data on the expansion of the road, electricity, and Internet networks, it provides reduced-form estimates of the impacts of infrastructure investments on the sectoral composition of employment. It uses a spatial general equilibrium model, based on Moneke (2020), to quantify the impacts of future transport investments and trade facilitation measures on economic development in the Horn of Africa countries. -
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A Framework for Enhancing Intra-regional Connectivity in the Horn of Africa
(World Bank, Washington, DC, 2021-06-21)This background paper systematically maps and assesses the connectivity of cities in the Horn of Africa (HoA) and uses the results to proposes a number of policy perspectives on how to strategically boost connectivity in different parts of the region. Analytically, this is achieved through network analysis of the directness, the diversity, topology and the density of HoA cities’ transport infrastructure connections. Crucially, network analysis allows proxying HoA cities’ potential to participate in value chains at various geographical scales and identifying key areas of possible intervention. Results can guide institutional and governance measures that can be taken to influence connectivity as a whole and for specific cities and transport corridors in particular. The output can thus help determine the interventions that are needed to tackle bottlenecks in corridors, addressing infrastructure, policy and regulatory constraints. The remainder of this paper is organized as follows. Section 2 outlines the rationale for an analysis of inter-urban connectivity in general and its linkages with the broader topic of regional integration and the economic geographies of the HoA in particular. Section 3 discusses our analytical framework, while Section 4 discusses the results. The paper is concluded with a discussion of key policy perspectives in section 5. -
Publication
A Review of Cross-Border Trade in the Horn of Africa
(World Bank, Washington, DC, 2021-06-21)This paper provides a review of existing literature on cross-border trade among the Horn of African countries Djibouti, Eritrea, Ethiopia, Kenya and Somalia. It offers analysis on key traded products particularly food crops and livestock, a review on main trade routes and border marketing centers;the operation of cross-border value chains in the borderlands, including the economic impact on border communities and a summary of commonchallenges facing cross-border trade within the region. The review is augmented with analysis of available data on trade between these countriesfrom UN COMETRADE, FEWS NET and FAO.To put cross-border trade in context, the paper starts by reviewing the available information from officially recorded trade data. -
Publication
Ethiopia - Accelerating Equitable Growth : Country Economic Memorandum, Part 2. Thematic Chapters
(Washington, DC, 2007-06)This report presents an update on the economic challenges facing Ethiopia with a focus on the shared goal of accelerating equitable growth. The starting point is the Government's own Plan for Accelerated and Sustained Development to End Poverty (PASDEP), which is in the process of finalization, and is designed to cover the period 2005-2010. This report proposes that the growth strategy should more explicitly adopt a "two-legged" approach that would both (a) consolidate and deepen an essentially balanced, broad-based and inclusive growth strategy and (b) adopt a more selective approach to speed up growth, allowing for identification and support for dynamic new activities, based on private and public sector discoveries, innovations, and partnerships. This report suggests ways forward to complement and strengthen the PASDEP. It brings together recent analysis and thinking from a range of sources, to put forth a storyline and key elements of the strategy in Part I. The second part provides a series of chapters on key themes - viz. recent and longer term economic developments, rural development, the private sector, the infrastructure challenge, and the institutions and governance. The report seeks to provide adequate coverage of the major challenges facing Ethiopia in its efforts to accelerate equitable growth, drawing on work across a range of themes including the Institutional and Governance Review. -
Publication
Ethiopia - Accelerating Equitable Growth : Country Economic Memorandum, Volume 1. Overview
(Washington, DC, 2007-04)This report presents an update on the economic challenges facing Ethiopia with a focus on the shared goal of accelerating equitable growth. The starting point is the Government's own Plan for Accelerated and Sustained Development to End Poverty (PASDEP), which is in the process of finalization, and is designed to cover the period 2005-2010. This report proposes that the growth strategy should more explicitly adopt a "two-legged" approach that would both (a) consolidate and deepen an essentially balanced, broad-based and inclusive growth strategy and (b) adopt a more selective approach to speed up growth, allowing for identification and support for dynamic new activities, based on private and public sector discoveries, innovations, and partnerships. This report suggests ways forward to complement and strengthen the PASDEP. It brings together recent analysis and thinking from a range of sources, to put forth a storyline and key elements of the strategy in Part I. The second part provides a series of chapters on key themes - viz. recent and longer term economic developments, rural development, the private sector, the infrastructure challenge, and the institutions and governance. The report seeks to provide adequate coverage of the major challenges facing Ethiopia in its efforts to accelerate equitable growth, drawing on work across a range of themes including the Institutional and Governance Review.