Working Paper

Ethiopia’s Growth Acceleration and How to Sustain It : Insights from a Cross-Country Regression Model

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collection.link.5
https://openknowledge.worldbank.org/handle/10986/9
collection.name.5
Policy Research Working Papers
dc.contributor.author
Moller, Lars Christian
dc.contributor.author
Wacker, Konstantin M.
dc.date.accessioned
2015-07-14T22:18:53Z
dc.date.available
2015-07-14T22:18:53Z
dc.date.issued
2015-06
dc.description.abstract
Ethiopia has experienced a growth acceleration over the past decade on the back of an economic strategy emphasizing public infrastructure investment and supported by heterodox macro-financial policies. To analyze the country’s growth performance during 2000–13, the paper employs a neoclassical cross-country System Generalized Method of Moments regression model. The analysis finds that accelerated growth was driven by public infrastructure investment and restrained government consumption, and supported by a conducive external environment. Macroeconomic challenges arising from declining private credit, real currency overvaluation, and relatively high inflation held back some growth. The model accurately predicts Ethiopia’s growth over the period of analysis and is robust to country-specific parameter heterogeneity and alternative infrastructure variables. Looking ahead, model simulations under alternative policy scenarios are indicative that growth may decelerate in the coming decade, making it challenging for Ethiopia to attain its middle-income country target by 2025. Although simulated growth rates do not vary much by policy scenario, the paper discusses some of the emerging risks associated with a continued reliance on the current infrastructure financing model and potential future adjustments.
en
dc.identifier
http://documents.worldbank.org/curated/en/2015/06/24596060/ethiopia’s-growth-acceleration-sustain-itinsights-cross-country-regression-model
dc.identifier.uri
http://hdl.handle.net/10986/22164
dc.language
English
dc.language.iso
en_US
dc.publisher
World Bank, Washington, DC
dc.relation.ispartofseries
Policy Research Working Paper;No. 7292
dc.rights
CC BY 3.0 IGO
dc.rights.holder
World Bank
dc.rights.uri
http://creativecommons.org/licenses/by/3.0/igo/
dc.subject
ECONOMIC BOOM
dc.subject
FORECASTS
dc.subject
GROWTH RATES
dc.subject
MONETARY POLICY
dc.subject
GOVERNMENT EXPENDITURES
dc.subject
POLICY REFORMS
dc.subject
ECONOMIC GROWTH
dc.subject
NATIONAL ACCOUNTS
dc.subject
CAPITAL ACCUMULATION
dc.subject
LAGS
dc.subject
REAL INTEREST RATES
dc.subject
VALUATION
dc.subject
STRUCTURAL CHANGE
dc.subject
STABILIZATION POLICIES
dc.subject
INCOME
dc.subject
INTEREST
dc.subject
MACROECONOMIC MANAGEMENT
dc.subject
INVESTMENT RATE
dc.subject
MARGINAL COST
dc.subject
INTEREST RATE
dc.subject
REAL GDP
dc.subject
EXCHANGE
dc.subject
MACROECONOMIC POLICY
dc.subject
GDP PER CAPITA
dc.subject
TELEPHONE COVERAGE
dc.subject
RESOURCE ALLOCATION
dc.subject
LIQUIDITY
dc.subject
EXPORTS
dc.subject
DEVELOPING COUNTRIES
dc.subject
MARGINAL PRODUCT
dc.subject
POLITICAL ECONOMY
dc.subject
GROWTH MODEL
dc.subject
PUBLIC INFRASTRUCTURE
dc.subject
ECONOMIC POLICY
dc.subject
DEVALUATION
dc.subject
HIGH INFLATION
dc.subject
VARIABLES
dc.subject
TRADE OPENNESS
dc.subject
BENCHMARKS
dc.subject
INPUTS
dc.subject
DEVELOPMENT GOALS
dc.subject
INFLATION
dc.subject
TRENDS
dc.subject
ECONOMIC OUTLOOK
dc.subject
CENTRAL BANK LENDING
dc.subject
BANK LENDING
dc.subject
CENTRAL BANK
dc.subject
DEVELOPMENT
dc.subject
INDIVIDUAL POLICIES
dc.subject
STANDARD DEVIATION
dc.subject
INFLUENCE
dc.subject
EMPIRICAL RESULTS
dc.subject
TOTAL FACTOR PRODUCTIVITY
dc.subject
PER CAPITA INCOME
dc.subject
EXPORT GROWTH
dc.subject
TELECOMMUNICATIONS
dc.subject
LOW-INCOME COUNTRIES
dc.subject
INCOME INEQUALITY
dc.subject
ECONOMIC DOWNTURNS
dc.subject
RELATIVE IMPORTANCE
dc.subject
BASE YEAR
dc.subject
PRODUCTIVITY
dc.subject
ECONOMETRICS
dc.subject
INDUSTRIALIZATION
dc.subject
MONOPOLY
dc.subject
DEMOCRATIC INSTITUTIONS
dc.subject
DEBT
dc.subject
PER CAPITA GROWTH
dc.subject
INFLATION RATE
dc.subject
INCOME LEVELS
dc.subject
ECONOMIC REFORMS
dc.subject
TRADE POLICY
dc.subject
BASKET OF GOODS
dc.subject
NATURAL RESOURCES
dc.subject
AVERAGING
dc.subject
INTEREST RATE EFFECT
dc.subject
PUBLIC INVESTMENT
dc.subject
MACROECONOMIC STABILIZATION
dc.subject
EXTERNAL FACTORS
dc.subject
TAXES
dc.subject
INFRASTRUCTURE INVESTMENT
dc.subject
LEADING INDICATORS
dc.subject
PRODUCTIVITY GROWTH
dc.subject
CONSUMPTION
dc.subject
EMPIRICAL GROWTH MODEL
dc.subject
HUMAN CAPITAL
dc.subject
VALUE ADDED
dc.subject
OPPORTUNITY COST
dc.subject
CAPITAL
dc.subject
WAGES
dc.subject
POPULATION SHARE
dc.subject
INTERNATIONAL TRADE
dc.subject
OPEN MARKET OPERATIONS
dc.subject
ECONOMETRIC ANALYSIS
dc.subject
MACROECONOMIC OUTCOMES
dc.subject
FINANCIAL POLICIES
dc.subject
EXTERNAL CONDITIONS
dc.subject
VALUE
dc.subject
BENCHMARKING
dc.subject
COMPETITIVENESS
dc.subject
CREDIT
dc.subject
MACROECONOMICS
dc.subject
STATE-OWNED ENTERPRISES
dc.subject
NATIONAL INCOME
dc.subject
FACTOR PRICES
dc.subject
AGRICULTURE
dc.subject
GROWTH MODELS
dc.subject
MEASUREMENT
dc.subject
ERROR TERM
dc.subject
REAL EXCHANGE RATE
dc.subject
BENCHMARK
dc.subject
ECONOMIC THEORY
dc.subject
GLOBAL CONDITIONS
dc.subject
POLICY PERSPECTIVE
dc.subject
ECONOMICS
dc.subject
FIXED EFFECTS
dc.subject
TRADE
dc.subject
GDP
dc.subject
GOODS
dc.subject
THEORY
dc.subject
FINANCIAL DEVELOPMENT
dc.subject
GROWTH RATE
dc.subject
INVESTMENT
dc.subject
GROWTH POLICY
dc.subject
GROWTH REGRESSIONS
dc.subject
TOTAL FACTOR PRODUCTIVITY GROWTH
dc.subject
CREDIT RATIONING
dc.subject
GROWTH PERFORMANCE
dc.subject
POVERTY
dc.subject
GROWTH REGRESSION
dc.subject
COUNTRY CHARACTERISTICS
dc.subject
ECONOMIC TRENDS
dc.subject
GINI COEFFICIENT
dc.subject
OVERVALUATION
dc.subject
CAPITAL ACCOUNTS
dc.subject
POLICY RESEARCH
dc.subject
GROWTH POLICIES
dc.subject
HIGH GROWTH
dc.subject
MACROECONOMIC POLICIES
dc.subject
EXCHANGE RATE
dc.subject
PUBLIC SPENDING
dc.subject
OUTCOMES
dc.subject
CONSUMPTION INCREASES
dc.subject
DEVELOPMENT INDICATORS
dc.subject
POSITIVE EFFECTS
dc.subject
MIDDLE INCOME COUNTRIES
dc.subject
PRICES
dc.subject
LONG RUN
dc.subject
GROWTH PROJECTIONS
dc.subject
DEVELOPMENT POLICY
dc.subject
HUMAN DEVELOPMENT
dc.subject
FUTURE RESEARCH
dc.subject
GROWTH
dc.title
Ethiopia’s Growth Acceleration and How to Sustain It
en
dc.title.subtitle
Insights from a Cross-Country Regression Model
en
dc.type
Working Paper
en
okr.date.disclosure
2015-06-08
okr.doctype
Publications & Research
okr.doctype
Publications & Research :: Policy Research Working Paper
okr.docurl
http://documents.worldbank.org/curated/en/2015/06/24596060/ethiopia’s-growth-acceleration-sustain-itinsights-cross-country-regression-model
okr.globalpractice
Macroeconomics and Fiscal Management
okr.googlescholar.linkpresent
yes
okr.identifier.doi
10.1596/1813-9450-7292
okr.identifier.externaldocumentum
090224b082f0be6b_2_0
okr.identifier.internaldocumentum
24596060
okr.identifier.report
WPS7292
okr.language.supported
en
okr.pdfurl
http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2015/06/09/090224b082f0be6b/2_0/Rendered/PDF/Ethiopia0s0gro0try0regression0model.pdf
en
okr.region.administrative
Africa
okr.region.country
Ethiopia
okr.topic
Finance and Financial Sector Development :: Debt Markets
okr.topic
Poverty Reduction :: Pro-Poor Growth
okr.topic
Private Sector Development :: Emerging Markets
okr.topic
Macroeconomics and Economic Growth
okr.topic
Macroeconomics and Economic Growth :: Economic Growth
okr.topic
Macroeconomics and Economic Growth :: Economic Modeling and Statistics
okr.topic
Macroeconomics and Economic Growth :: Economic Theory & Research
okr.unit
Macroeconomics and Fiscal Management Global Practice Group.

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