Country Economic Memorandum

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Ethiopia’s Great Transition: The Next Mile - A Country Economic Memorandum

(Washington, DC : World Bank, 2022-06-17) World Bank

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.
Overview of Digital Development in the Horn of Africa

(World Bank, Washington, DC, 2021-06-21) Kelly, Timothy ; Dunand, Eric

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.
Infrastructure and Structural Change

(World Bank, Washington, DC, 2021-06-21) Herrera Dappe, Matias ; Lebrand, Mathilde

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.