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ETHIOPIA’S POTENTIAL FOR DEVELOPMENT 2
political stability and economic upsurge. The ascension to power of a new Prime Minister in
2018 has fostered political tranquility and quelled the long-lasting socio-political crises. The
International Monetary Fund projects the country’s economy to grow by 8.5 percent in 2019. In
the past decade, Ethiopia recorded an approximate 10% economic growth. Although the country
has an underdeveloped private sector and experiences constraints in the manufacturing sector,
the Growth and Transformation Plan aims a typical 11% GDP growth annually. The
geographical proximity to the Gulf, internal political stability and viable economic stability
Geographical factors like the spread of flora and fauna, existence of renewable resources
and latitude have a significant impact on the development of Agriculture. Although the
2014). Ethiopia is becoming one of the fast growing non-oil economies in Africa. The World
Bank posits that the state-led models of economic development based on agronomy have made
Ethiopia to stand out from her high performing neighbors. Although the country guarantees food
security, the government has sought to open the country to foreign investors on lease agreements.
The investors’ expertise in Agriculture have steered economic growth. Evidently, the
geographical location and Ethiopia’s ecological instances have improved the country’s economy.
Institutions play a critical role in a nation’s economy as they invoke economic outcomes
through the elimination of market failures. The market and the state are autonomous institutions
ETHIOPIA’S POTENTIAL FOR DEVELOPMENT 3
that can hinder or promote social cooperation. From a Marxist school of thought, Ethiopia’s
political institutions respond to the common good needs of the nation. Between 2000 and 2011,
the country’s poverty reduced by 26% while the income disparities remained low. Ethiopia has
embraced a statist perspective to institutions that has overseen increased public investments
according to its plans of economic production (Shiferaw, 2017). The decline in military
infrastructure. The government’s efforts to strengthen the country’s institutional framework has
Demographic factors including population density, age composition and fertility rate
have profound ramifications on a country’s potential to develop. Contrary to the common belief
that a high population can influence the dependency ratio and saving behavior, a higher working
age population can boost economic growth (Mberu & Ezeh, 2017). A proper management of
high population can elevate a country’s economic position through knowledge spill over,
specialization and labor market economies. Evidently, Ethiopia is among the most populated
countries in the Sub-Saharan Africa. The youth aged below 25 years constitute 60% of the
Ethiopian population. Although less than half of this population has attained college level
Over the past decades, Ethiopia has recorded the fastest economic growth in Africa. The
installation of development oriented government has steered the country to greater economic
heights. The availability of natural resources and favorable ecological conditions continue to
influence the country’s economic development. The institutional framework in Ethiopia has
influenced economic growth through policy oriented development initiatives. The government’s
initiative to promote peaceful co-existence by eliminating military rows has furthered the
ETHIOPIA’S POTENTIAL FOR DEVELOPMENT 4
country’s aspiration to attain economic prosperity. Despite the few challenges the country faces,
a culmination of these factors will, in the future, make Ethiopia the second developed nation in
Africa.
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References
Cuaresma, J. C., Doppelhofer, G., & Feldkircher, M. (2014). The determinants of economic
Mberu, B. U., & Ezeh, A. C. (2017). The population factor and economic growth and
Shiferaw, A. (2017). Productive capacity and economic growth in Ethiopia. United Nations,