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WEF: Five measures of growth that are better than GDP April 20, 2017

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Good jobs.  Wellbeing.  Environment. Fairness.   Health.


It is, of course, entirely possible for an economy to go faster and faster without getting closer to meeting these goals – indeed, while heading in the opposite direction.

World Economic Forum: Five measures of growth that are better than GDP


GDP is like a speedometer: it tells you whether your economy is going faster or slower. As in cars, a speedometer is useful but doesn’t tell you everything you want to know. For example, it won’t tell you whether you are overheating, or about to run out of fuel.
 Above all, the speedometer doesn’t tell you whether or not you’re going in the right direction. If you suggest to a car driver that you might be on the wrong road, and the response is “then we must go faster”, you might think that’s pretty stupid. Yet this is what happens whenever complaints about the state of the economy elicit a commitment to boost growth.

So what is the right direction for a modern economy? That’s a relatively easy question to answer: when you ask people, they say much the same things. A good economy meets everyone’s basic needs. It means people are healthy and happy with life. It avoids storing up potential sources of long-term trouble, such as extreme inequality and environmental collapse.

It is, of course, entirely possible for an economy to go faster and faster without getting closer to meeting these goals – indeed, while heading in the opposite direction.

Now the trickier part. What would be the economic equivalent of a compass? We need to measure the direction of economic travel in a way that’s comparable to how GDP measures its speed – easy to communicate, and amenable to being influenced by policy decisions.

The New Economics Foundation (NEF), where I was the Executive Director until December 2015, proposed five indicators in an October 2015 report. Imagine them arrayed like dials on a dashboard that you can glance at for an overall picture, as well as study in more detail if you want. Why five? It’s hard to capture everything that matters in one metric, and psychological research demonstrates that people struggle to hold more than five things in their heads at once.

1. Good jobs. Employment statistics tell us what proportion of people have jobs. They don’t tell us what proportion of those with jobs are paid too little to afford a decent standard of living, or worry about whether they’ll still have work next month.

According to UK government figures, 94% of people were in work in 2014 – up nearly two percentage points in four years. However, the NEF calculated that only 61% were in secure jobs paying a living wage – down a similar amount in the same period.

2. Wellbeing. A growing economy is not an end in itself – it’s a means to improving people’s lives. Few would disagree that the ultimate aim of public policy is wellbeing; we care about GDP because we assume it means more wellbeing. So why not also measure wellbeing directly?

The validity of research into measuring wellbeing, by asking people about their life satisfaction, is now widely accepted. Such measures capture a range of things that people care about and that policies can influence – from income and health to housing and social connections.

Some governments do measure life satisfaction, including the UK (it increased from 7.4 to 7.6, on a scale of 0-10, in the four years to 2014). However, it remains at the margins of policymaking.

3. Environment. The NEF propose a national indicator of lifestyle-related carbon emissions, relative to an allocation calculated from global targets for avoiding dangerous levels of climate change.

In four years, the UK’s position deteriorated from using 91% of its allocation to 98%. As climate is a global problem, this indicator is effectively a measure of responsible global citizenship.

4) Fairness. Research increasingly shows that high income inequality has negative social consequences, while casting doubt on the idea that it incentivises hard work.

Comparing the average incomes of the top and bottom 10%, inequality in the UK has been worsening by an average of 0.8% a year for the last four years.

5) Health. The NEF proposes “avoidable deaths” as a simple, easily-understandable measure that captures the quality of health interventions – not only treatment, but also prevention.

Here, the UK shows a positive trend, but with plenty of room for further improvement – the latest figures suggest 23% of deaths need not have happened.

Image: New Economics Foundation (NEF)

The NEF designed these measures with the United Kingdom in mind, working with the UK’s Office of National Statistics. But they are, in principle, just as meaningful for other countries.

The shortcomings of GDP, as a measure of what we want from an economy, are not a new discovery. The NEF and others have been making the case for years. But while various proposals for alternatives have engaged the interest of policymakers and technocrats, they have not yet taken hold among politicians.

That’s understandable: any politician who suggests new ways to judge their performance is also creating new ways to fail, and many policies that will pay long-term dividends on these indicators will also impose short-term costs.

More broadly, there remains a reluctance to move away from viewing economics as a hard, mathematical science, and accept the need to incorporate more of a social science mindset. In effect, we need another value shift in economics, comparable to those that shaped the last century – Kenyesianism and neoliberalism.

However, while the problems with the current economic system are increasingly widely appreciated, we still lack a compelling, coherent, simple alternative narrative. I hope these indicators can help that narrative to develop.


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World Atlas: Countries With The Lowest Income In The World April 16, 2017

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Countries With  Very Low per Capita GNIs: Malwai, Burundi, Central African Republic, Liberia, the Democratic Republic of Congo, Niger, Gambia, Madagascar, Guinea, Guinea-Bissau, and Ethiopia are all struggling with extreme poverty. Within them, GNI per capita rates vary from 250 to 550 international dollars. This often becomes even more concerning when considering that income disparities often leave the general population in an even poorer state the already bad numbers would suggest. Collectively, these countries need strong economic reforms to begin to fight poverty and increase the welfare of their citizens and secure stronger standings on the global economic scene.

Countries With The Lowest Income In The World

These following countries have the smallest Gross National Income (GNI) per capita worldwide.


The Gross National Income, or GNI, represents the sum of a nation’s Gross Domestic Product (GDP) plus any other net income received from overseas. Therefore, the gross national income measures both the domestic income of a country and the income it receives from abroad.The GNI per capita measures the average income earned by a person in a given country and is calculated by simply dividing the total GNI of the country by the total size of the population. Generally, GNI per capita is used to compare the state of wealth of a population and the standard of living in a country with those of other nations. GNI per capita is expressed in international dollars, and is based on Purchasing Power Parity (PPP), how far the money will go in buying commonly purchased goods in relation to that money’s ability to do the same elsewhere on the planet. When determining a country’s development status, GNI becomes an important economic factor. Taking into account all the considerations listed above, it becomes quite easy to understand why the countries with the smallest GNIs per capita tend to be developing countries which struggle with poor Infrastructure in terms of social welfare and economic development alike.

Malawi’s Economic Issues

According to World Bank data, the country with the smallest GNI per capita is Malawi, with 250 international dollars of income per person. Although the country enjoys a democratic and stable government, the economy continues to operate within a poor fiscal environment, characterized by the country’s high debt levels. The social environment is characterized by a proliferation of inequality and poverty, with over a half of the population being considered as poor, and one-quarter of it living in extreme poverty. The low agricultural productivity is one of the main obstacles in reducing the poverty, further worsened by increasing erratic weather patterns.

Post-Conflict Poverty in Burundi

Burundi, with a GNI of 270 international dollars, is the country with the second smallest GNI per capita. Even if the country is in the process of transitioning from a post-conflict economy to a stable, peacetime economy, poverty remains at troublingly high levels. The country is focusing on developing its basic social services, modernizing the public finance sector, and upgrading institutions and infrastructure across the board. Though it possesses a modernized industrial establishment, it above all relies on the agricultural sector, energy production, and mining for the majority of its revenues. The growing economy will increasingly offer more employment opportunities, and hopefully improvements in the standard of living will be quick to follow.

Underdeveloped Resources in the Central African Republic

The Central African Republic has the third-smallest GNI per capita value (330 international dollars). While it’s true that the country has recently been devastated by a political crisis, the Central African Republic was among the countries with the highest poverty rates well before the recent tumultuous events. The country possesses abundant natural resources but, unfortunately, they are generally very underdeveloped. Subsistence agriculture represents almost one-third of the gross domestic product. Exports of diamonds and wood, while relatively significant domestically, have clearly not been enough to raise the economy to the level of a major global power.

Liberia’s Epidemic

Liberia’s economy was gravely affected by the Ebola crisis that swept Africa for much of the new millennium. Indeed, the outbreak essentially reversed many of the important gains the country has made in the fights against political and economic insecurity and poverty. The quarantines implemented due to the Ebola epidemic affected the production and exports of rubber as workers were restricted in their daily travels, and contamination from African goods became a global concern. The weak business environment constrains the growth of manufacturing industries, and most of the important sectors suffered production disruptions due to the epidemic. The economy of Liberia definitely needs effective implementation of an economic recovery plan

Other Countries With Low per Capita GNIs

Besides these countries, the Democratic Republic of Congo, Niger, Gambia, Madagascar, Guinea, Guinea-Bissau, and Ethiopia are all struggling with extreme poverty as well. Within them, GNI per capita rates vary from 380 to 550 international dollars. This often becomes even more concerning when considering that income disparities often leave the general population in an even poorer state the already bad numbers would suggest. Collectively, these countries need strong economic reforms to begin to fight poverty and increase the welfare of their citizens and secure stronger standings on the global economic scene.

Gross National Income (GNI) per Capita

Rank Country GNI Per Capita (USD)
1 Malawi $250
2 Burundi $270
3 Central African Republic $320
4 Liberia $370
5 Congo, Dem. Rep. $380
6 Niger $410
7 Madagascar $440
8 Guinea $470
9 Ethiopia $550
10 Guinea-Bissau $550
11 Togo $570
12 Mozambique $600
13 Mali $650
14 Uganda $670
15 Afghanistan $680
16 Burkina Faso $700
17 Rwanda $700
18 Sierra Leone $700
19 Nepal $730
20 Comoros $790
21 Haiti $820
22 Zimbabwe $840
23 Benin $890
24 Tanzania $920
25 South Sudan $970

The inconvenient truth about foreign aid: The aid system colludes in redistributing wealth from poorer to richer. Under an aura of beneficence, aid is harnessed to self-interest. February 9, 2017

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Odaa OromooOromianEconomist

The inconvenient truth about foreign aid

For recipients aid has been a very mixed blessing, but for donors it’s been a bonanza.

Credit: Flickr/DFID. Some rights reserved.

It’s astonishing when you think about it. Why should an old and poorly-performing industry carry on, burdened with even more tasks, and provided with yet more money? I’m talking about foreign aid, whose mixed results have been reconfirmed countless times in the last 70 years.

For aid’s backers, such skepticism is unfair or at best premature. Successes, from combating diseases to promoting the ‘green revolution,’ are held as self-evident. With new, smarter policy formulas and management focused on results, failure is soon going to be minimized. Across most of the Left-Right spectrum, aid still enjoys political backing. Western spending continues largely upward. New aid donors from Turkey to Thailand are joining in. And tasks are expanding.To achieve the 169 targets of the world’s 17 Sustainable Development Goals by the year 2030, global leaders concur that foreign aid is vital.

For aid’s critics, however, ‘mixed results’ is a euphemism for badly designed, poorly-managed efforts guided by donor hobbies and flip-flopping policies that ignores the graveyards of failed programmes, the histories of waste, and the sometimes toxic outcomes of aid born of coercion and incoherence. China and Vietnam reduced poverty significantly with almost no Western aid, while aid-dependent countries like Malawi and Timor-Leste have fared badly—in which case why does the aid industry keep on prospering?

To answer that question we have to look at the drivers and navigation systems at work upstream in the system where the captains of the aid industry confer. These drivers get little serious probing, but the knowledge we do have points to an inconvenient truth: the main systems of development aid chiefly serve the donors. The aid system colludes in redistributing wealth from poorer to richer. Under an aura of beneficence, aid is harnessed to self-interest.

Here’s how.

To buy goodwill from others or coerce them, aid provides a classic tool of statecraft. For the biggest donors it can buy votes at the United Nations, keep client regimes ‘onside’, punish troublemakers and open doors to powerful people. As a former senior US aid official put it, “Foreign aid … is like political campaign contributions:  it can facilitate the access of those providing it to those receiving it.” Giving aid helps governments to look good in diplomatic forums while encouraging taxpayers to feel good about their generosity.

In addition, ‘our security’ is at stake. Since 9/11 development and humanitarian aid has increasingly been subordinated to hard power aims—that is ‘securitized.’ European aid, for example, is now supposed to help curb irregular migration from Africa.  Meanwhile, military doctrine and operations have become ‘developmentalized,’ complementing older practices in which aid lubricates access to strategic assets as in Kyrgyzstan, where western aid was exchanged for use of an airbase serving NATO operations in Central Asia.

Boosting exports and investments are major objectives of aid providers. A scholarly consensus, backed by many studies, holds that the mercantile interests of aid givers usually enjoy priority over the interests of aid recipients. For donors the pay-offs are many. For example, for every €10 the Dutch provide in bilateral aid to an average recipient country, Dutch exports to that country increase in the short run by €7 to €9. In the longer run, as goodwill and force of habit take hold, aid-induced sales then become even more lucrative. In the period 1988-2004, each dollar in Western bilateral aid yielded 2.15 dollars in additional exports of goods and services by Western businesses.

Donors use aid to gain footholds for their industries, like Japanese fishing fleets in the South Pacific, French uranium mining in Niger and oil and gas companies in emerging producers of hydrocarbons. Aid providers work assiduously to lower costs and risks for their business investors using subsidies like low-cost loans, insurance and market advice. In recipient countries they add to physical infrastructure and occasionally skilled-up workforces. But the aid system’s most powerful contributions involve the transmission and enforcement of ‘sound policy’, meaning policy that is suitable for investors.The formulas are well-rehearsed: sell-offs of public property; weaker protection of labour rights and environmental safeguards; and taxes shifted from foreign flows to domestic sources.

Under the World Bank’s ‘competitive cities’ approach, municipalities are pushed to compete for outside investment by offering tax ‘sweeteners’, land and other subsidies. With the rise of financial sector power, donors have facilitated the growth of stock markets and hot money flows. Key to these investor-friendly climates has been austerity—driving down public spending in recipient countries.

Acting almost as bailiffs, donors also help to extract payments to big pharmaceutical and software firms who own patents, copyrights and other kinds of ‘intellectual property.’ In the years 2012-2015, sub-Saharan African countries together paid about $10 billion to these private interests, up from about $8.7 billion in the years 2007-2010. But because rich country tax laws allow firms to hide profits, these World Bank data may actually understate the true scale of extraction.

Under vigorous donor pressure, poorer countries have poured trillions of dollarsinto Western banks under a rationale of self-insurance. As the economist C. P. Chandrasekhar has pointed out “This reverse flow of capital essentially means that excess savings in emerging markets are being ‘recycled’ in ways that put the responsibility of allocating that capital in the hands of a few financial decision makers … sitting at the apex of a concentrated global financial system.”

Consistent with their promotion of rent-seeking from ‘intellectual property’, donors show almost no interest in curbing cartels and other anti-competitive practices by transnational firms. Research is scarce, but it points to massive losses for poorer countries. One study estimates that annual losses are equivalent to at least 50 percent, and could equal as much as 300 percent of aid disbursed.

Donors have also invested in knowledge, but gains can flow back disproportionately to themselves. Aid for the ‘Green Revolution’, for example, helped boost crop yields in poor countries, but major beneficiaries have been western agribusinesses. Up to the early 1990s, estimated returns to such firms were forty times the amount of aid paid out originally by the US for research and development of the ‘Revolution’s’ higher-yield technologies.

Contrary to the belief that aid-financed programmes target diseases that mainly affect people in the tropics, research shows that “development aid is intended to alleviate the threats to populations within the donor state.” And since the 1960s, foreign aid has brought hundreds of thousands of students from poorer countries to study at universities in Europe and North America. Today, student fees and expenses annually absorb more than $3 billion in aid—virtually all of it spent in donor countries.  Where the longer-term benefits from aid-funded scholarship programmes go isn’t known with much precision, but there is some evidence that former scholarship holders from Africa tend to stay in richer countries, or to work abroad in Western firms and other organisations.

In sum, poorer countries routinely put more resources at the disposal of donor country interests than they receive in foreign aid, yet it isn’t easy to demonstrate this inconvenient truth conclusively. Estimating the extent of the aid system’s collusion in ‘perverse’ aid is often guesswork because the system’s upper reaches lack transparency. Laws, rules, political agreements and sheer inattention shield many counter-flows from public view. Every year, thousands of evaluations of aid’s ‘downstream’ activities take place but I know of no formal evaluation of aid mechanisms ‘upstream’ that would indicate with precision who benefits and by how much.

Does it have to be this way?

In 1943, at a time of enormous human suffering, one of the 20th century’s greatest activist-philosophers, Simone Weil, wrote about the characteristics of practical compassion for others.  She insisted that help must be concrete and authentic: “All human beings are bound by identical obligations, although these are performed in different ways according to the circumstances…. The obligation is only performed if… expressed in a real, not a fictitious, way.” Today, in framing debates about obligations across borders, that plea has lost none of its relevance.  It calls for lucidity, and hence the rejection of pseudo-solutions promoted through the foreign aid system.

Activists, academics, journalists and NGOs in a number of fields are already focusing on counter-flows and the legal gimmicks and non-transparency that promote them.  Although based outside the mainstream aid system, these initiatives are getting respectful attention from some donors, notably in Norwaybut also in a few knowledge centres of the United Nations. A prime example is the movement for tax justice.These combined efforts have begun to pay off as better tax enforcement and new rules yield more revenues for public purposes. Meanwhile a bloc of non-Western governments at the United Nations led by Ecuador is pressing to create a global tax body.

A system of global taxation won’t be with us soon, but as this idea gains traction it may open up a pathway towards an authentic system of redistribution across national borders. In so doing it could help to replace today’s machinery of upward redistribution, re-build decent social contracts, and ultimately sideline foreign aid as we know it.

Causes and Effects of Land Size Variation on Smallholder’s Farm-Income: The Case of Kombolcha District of East Hararghe, Oromia, Ethiopia February 5, 2017

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Odaa OromooOromianEconomist

 


Causes and Effects of Land Size Variation on Smallholder’s Farm-Income: The Case of Kombolcha District of East Hararghe, Oromia, Ethiopia

By Abera Gemechu Doti, Open Access Library Journal (OALib Journal) DOI: 10.4236/oalib.1103312, PP. 1-17


Abstract

For farmers, farmland is a basis of their livelihood and the basic agricultural resource and is now becoming a constraint in agricultural production. This study was carried out in Kombolcha district of Oromia National Regional State. The specific objectives of the study were to identify the factors affecting size of landholding and to analyze the effects of land size variation on farm income. To address these objectives a two-stage random sampling procedure was used to select 5 peasant associations and 110 sample respondents from a total of 19 peasant associations found in the district. Multiple linear regression and Cobb-Douglass production functions were used for analyzing the cause of land size variation and effects of land size variation on farm income respectively. Accordingly, age of the household head, agro ecology, family size and land availability in PA were found to be the significant factors in causing variation in size of land holding in the study area. The regression coefficients of the Cobb-Douglass production function indicate that the size of cultivated land, average land productivity, livestock owned and non-farm income were statistically significant factors in explaining variation in farm income among farmers. Therefore, there should be urgency of devising means and ways to improve the farm income through strengthening the production of cash crops. Besides this, productivity of land should be increased through the introduction of high yielding varieties of crops. And there should be strategy to create non-farm income sources for the smallholder farmers.


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Cite this paperDoti, A. G. (2017). Causes and Effects of Land Size Variation on Smallholder’s Farm-Income: The Case of Kombolcha District of East Hararghe, Oromia, Ethiopia. Open Access Library Journal, 4, e3312. doi: http://dx.doi.org/10.4236/oalib.1103312.

References

[1] MOFED (Ministry of Finance and Economic Development) (2010) Ethiopia: (Sustainable Development and Poverty Reduction). (Draft). Addis Ababa.
[2] MOFED (Ministry of Finance and Economic Development) (2003) Challenges and Prospects of Food Security in Ethiopia. Proceedings of Food Security Conference2003, Professional Associations Joint Secretariat, Addis Ababa.
[3] EEA (Ethiopian Economic Association) (2002) A Research Report on Land Tenure and Agricultural Development in Ethiopia, October 2002, Addis Ababa.
[4] Mariam, M.W. (1999) Land and Development in Ethiopian. Economic Focus, 2, 12.
[5] Kebede, B. (1998) Agricultural Credit and Factors Impeding Loan Repayment Performance of Small-Holders in Central Highlands of Ethiopia: The Case of Alemgena District. Unpublished M.Sc. Thesis, AUA, Ethiopia.
[6] Rahmato, D. (1998) Land and Rural Poverty in Ethiopia. A Paper Presented on Forum for Social Studies, Addis Ababa (Unpublished).
[7] Joshi, M.R. (1990) Status and Agro Forestry Opportunities. In: Agro Forestry in the Taria. Seminar Proceedings. U.N, Food and Agricultural Organization and the Department of Forestry and Government of Nepal, Nepal, 5-11.
[8] West, H.W. (1982) Land Tenure, Policy and Management in English Speaking African Country. The United Nation University, Rome.
[9] CSA (Central Statistical Authority) (2007) Populations and Housing Census of Ethiopia: Results for Oromyia Regional National State. Addis Ababa.
[10] Sankhayan (1998) Introduction to the Economics of Agriculture of the Agricultural. New Production Delhi, Prentice-Hall of India Private Limited.
[11] Koutsoyiannis, A. (1973) Theory of Econometrics. An Introductory Exposition of Econometric Methods. The Macmillan Press Ltd, London, UK.
[12] Tesso, G. (2003) Variation in Land Size and Its Effects on Farmers’ Income. The Case of Qarsa Qondaltiti District. Unpublished M.Sc. Thesis, AUA, Alemaya Ethiopia.
[13] Adnew, B. (1992) Analysis of Land Size Variation and Its effects: The Case of Smallholder Farmers in the Hararghe High Land. Unpublished M.Sc. Thesis, Alemaya University.
[14] Gujarati, D.N. (1995) Econometrics. 3rd Edition, McGraw-Hill, Inc., New York.

How and why we are moving beyond GDP as a measure of human progress January 13, 2017

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Odaa OromooOromianEconomist


How we track our economy influences everything from government spending and taxes to home lending and business investment. In our series The Way We Measure, we’re taking a close look at economic indicators to better understand what’s going on.


Ever since 1944, Gross Domestic Product (GDP) has been a primary measure of economic growth. It’s in the news regularly and, even though few can define what it means, there is general acceptance that when GDP is growing, things are good.

There are problems with this simplistic formulation.

GDP measures production only. It does not capture collapsing fish stocks, increasing obesity and diabetes, or new types of synthetic drugs. When people choose to work part-time to have a better work-life balance, GDP actually goes down.

This narrow focus distorts our perception of progress. It guides our representatives to focus only on certain things – what is measured – and allows them to ignore what isn’t quantified and regularly reported.

But a new set of measures is slowly being established, which aims to capture a wider range of human experiences and reset our idea of “success”. Called the UN Sustainable Development Goals (SDGs), these aim to include all the main pillars of a progressive society, from physical safety through to economic opportunity and good health.

SDGs will force action by highlighting what is currently covered up by the narrow measures of how our economy and society are faring.


Click here to read at more at the conversation

Made in China: Once known for cheap knockoffs, Chinese companies are now the world’s innovators — Quartz October 30, 2016

Posted by OromianEconomist in 25 killer Websites that make you cleverer, Uncategorized.
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Odaa Oromoooromianeconomist

Most of us use products made in China every day and are aware of its growing economic power as a factory to the world. But China intends to become a developed nation by mid-century, and integral to this ambition is its intense focus on innovation. In a few decades, Chinese companies have evolved from imitators…

via Made in China: Once known for cheap knockoffs, Chinese companies are now the world’s innovators — Quartz

Tour operators cancel holidays as unrest tightens grip on Ethiopia. #OromoProtests #OromoRevolution October 29, 2016

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 By Hugh MorrisThe Telegraph, 28 OCTOBER 2016

Saga Holidays is among a number of major UK tour operators to cancel trips to Ethiopia as a wave of unrest spreads across the African country.

The Foreign Office (FCO) is advising against all travel to some regions in the east and all but essential travel to central parts that include places such as Lalibela, popular with tourists for its rock-cut churches.

Saga, Kuoni and Cox and Kings are among those to have cancelled tours for this year, offering refunds or alternatives to customers.

The Ethiopian government this month declared a six-month state of emergency and arrested more than 1,600 people as the FCO warned of clashes between protesters and security forces. Protests have been most fervent in the Amhara and Oromia regions.

In August, some 90 people were believed to have been killed after police used live bullets on protesters chanting anti-government slogans and waving dissident flags.

Foreign Office advice Ethiopia
The Foreign Office has different advice for different parts of the country CREDIT: FOREIGN OFFICE

“Demonstrations have been taking place in the Oromia and Amhara regions in 2016 and further protests are likely,” the Foreign Office said.

“Tensions in Oromia have significantly risen since October 2 when up to 100 people died during a stampede at the Irreechaa religious festival.

“There has been widespread disruption to road travel across Ethiopia. Unauthorised and official roadblocks can appear with little or no warning.”

The country had recently been experiencing a boom in its tourism industry, thanks to its unique mix of history, wildlife and culture. Last year, the country was praised by the European Council on Tourism and Trade for its “excellent preservation of humanity landmarks”.

Beside the rock-hewn churches of Lalibela, other draws include the Simien Mountains National Park, Lake Langano, and the Danakil Depression, one of the hottest places on earth.

A spokesperson for Kuoni, which offers a tour of the highlights of Northern Ethiopia, said it had stopped selling the trip and would be monitoring the situation.

A spokesperson for Saga, too, said all 2016 departures had been cancelled, adding: “The initial change to FCO advice was that some areas should be avoided. As a result tours were amended to ensure that our holidaymakers were nowhere near those areas. However… the advice changed again and advised against all but essential travel to certain regions of Ethiopia. As a result we took the decision to cancel all 2016 departures.”

Cox and Kings said it would only be able to resume its trips should the FCO advice change.

Responsible Travel, which hosts a number of tour operators on its website running trips in Ethiopia, said some of its clients are continuing to offer tours.

“Several of the holidays we market in Ethiopia are run by local tour operators, who will continue to offer and run the same trips as they always have done,” said marketing manager Sarah Faith.

“It is then up to each individual traveller to consider the FCO advice and to purchase insurance that will cover them given the FCO warnings.

“Our local operators in Ethiopia are extremely well-placed to understand the day-to-day situation on the ground in the country.”


Click here to read related article: Financial Times: Ethiopian unrest triggers collapse in tourism. #OromoProtests #OromoRevolution

Financial Times: Ethiopian unrest triggers collapse in tourism. #OromoProtests #OromoRevolution October 27, 2016

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Odaa OromooOromianEconomist
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Ethiopia:“Things are effectively on hold,” said Jim Louth, owner of Undiscovered Destinations, a UK travel company. “If anyone inquires, our policy is to say people are being advised not to go.”  Financial Times

#OromoProtests: “Strikes, ‘ghost town days’ and non-violent protests are more common now because they’re so much harder to police, even under the state of emergency.”  Financial Times


Ethiopian unrest triggers collapse in tourism

Protests and state of emergency see bookings to historic sites grind to a halt


orompoprotests-picture-from-the-economist-13-october-2016
oromoprotests-image-from-financial-times
A wave of anti-government protests has caused a collapse in tourist bookings to Ethiopia 

A wave of anti-government protests and the imposition of a state of emergency has triggered a collapse in tourism bookings in Ethiopia, underlining the effect the unrest is having on one of Africa’s best-performing economies.

As the demonstrations spread across the country, governments, including the US, UK, Australia, Canada and Ireland, have advised their citizens against all non-essential travel to the country or Amhara and Oromia regions at the centre of the instability.

Hailemariam Desalegn, Ethiopia’s prime minister, has said the death toll from the demonstrations, which began last November and have been exacerbated by the authoritarian regime’s brutal crackdown on protesters, could be as high as 500. Thousands of people have been arrested and the government imposed a state of emergency as it grapples with the biggest threat to the Horn of Africa nation’s stability in years. The protests originally began over land disputes, but the state’s harsh response caused them to spiral into broader protests against the government.

An American woman was killed after being caught up in a protest on the outskirts of Addis Ababa, the capital, this month.

Travel companies said bookings to the country — home to ancient Christian sites and spectacular highlands — have virtually ground to halt as the unrest and travel warnings keep visitors away.

“Things are effectively on hold,” said Jim Louth, owner of Undiscovered Destinations, a UK travel company. “If anyone inquires, our policy is to say people are being advised not to go.”

Tourism has become an important part of the economy, which has been growing at an annual average of about 10 per cent over the past decade as Ethiopia has attracted increasing levels of foreign investment.

The government estimates the sector contributes about 4.5 per cent of gross domestic product, or $2.9bn. The indirect contribution, through investment, is the same, while about 1.5m people are thought to earn their living from the industry.

More than 750,000 foreign tourists visited Ethiopia last year, with the US by far the largest country of origin, followed by China, Britain and Germany, according to government data.

oromoprotests-and-fascist-tplfs-human-rights-violations-anaginst-civilians-2016-bbc-sources

The blow to tourism comes amid rising investor uncertainty as foreign companies, particularly flower farms and textile factories, have been targeted in a string of attacks that have caused tens of millions of dollars of damage.

The International Monetary Fund warned just before the state of emergency was imposed this month that attracting foreign investment will be crucial to sustaining the high growth rates.

Some travel companies said one problem is that while some of Ethiopia’s most popular sites — such as the city of Aksum — are not located in Amhara or Oromia, people have to travel through those regions to reach them.

“People on their first visit will want to go to the main sites and not be stressed,” said the UK-based Ultimate Travel Company. “More adventurous travellers might still go to places like the Omo valley that haven’t been affected, but most people will simply wait.”

The Ethiopian Tourism Organisation, a government body, insisted that “all tourist areas of the country are safe”.

“It is as safe now for tourists and business visitors to travel in Ethiopia as it has been for the last 22 years since the new constitution has been introduced,” it said in a statement.

Kiros Mahari, the general manager of the Ethiopian Tour Operators Association, said that “while there has been some unrest for a while, the situation has been restored back to normal”.

Emma Gordon, an analyst at Verisk Maplecroft, a risk consultancy, said such statements “come across as unbelievable”.

“The situation is quieter now than a few weeks ago, but the protests have not stopped,” she said. “Strikes, ‘ghost town days’ and non-violent protests are more common now because they’re so much harder to police, even under the state of emergency.”

Ms Gordon predicted that once the protesters had worked out how to cope with the state of emergency, which bans all protests, political communication on social media, and political gatherings, “there will be an upsurge in unrest”.


 

#OromoProtests, #OromoRevolution: The point of no return in Ethiopia

Ethiopia Ranked 4th Most Fragile State

 


The Indian Economist: Behavioural Economics, Psychology and Free Trade August 17, 2016

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Odaa OromooOromianEconomist

 

The transaction “utility” (economists’ term for satisfaction) compares the price one thinks is justified (the “reference price”) to the actual price they have to pay. If reference price is less than or equal to the actual price, humans get satisfied.

For free-trade skeptics, buying a relatively varied and less expensive basket of commodities is an alluring development. However, the transaction utility (satisfaction) is severely negative. This is because they are not willing to pay the price of substantial layoffs and unemployment at home (incidents that they perceive chiefly stem from globalisation) in order to get the goods for cheap.

Whether they are right or wrong is another matter, but the heavy moral cost they face because of perceived guilty conscience is too high. This results in a dissatisfaction with the current state of free trade and borderless transactions. In short, they suffer from a negative overall utility.

read more at:-

http://theindianeconomist.com/behaviour-economics-psychology-free-trade/

How fast fashion has made some of the richest men on Earth August 2, 2016

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Odaa Oromoo

When you think of the industries that allow a person to acquire a massive fortune—the kind that makes them the wealthiest person in a country, or continent—your mind probably goes to fields such as technology, or oil. But clothes, and especially cheap clothes have turned out to be a surprisingly good route for many of…

via Fast fashion has made some of the richest men on Earth — Quartz

The Irrationality of Rationality July 19, 2016

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Odaa Oromoorational constrained choice


The confined view of rationality regarding humans has strong relevance while carrying out activities like trade and exchange. Although rationality must not be ignored, understanding other key drivers behind transactions could widen our approach to comprehending and applying economics.

For instance, why do some universities conduct exams without an invigilator? Or why do most people value products they use beyond their monetary value (such as a coffee mug or passes for a cricket match)? Or even with no waste bins, why do some roads stay significantly cleaner than the others?

To answer the above questions, one would have to move away from the usual notion of maximising self-interest. Much literature has come to light during last few decades by behavioural economists and psychologists such as D. Kahneman, A. Tversky and others, in the field of psychological sensitivity. They suggest that various characteristics determine the choices that one makes. Most importantly, they point out that these reasons are beyond the maximisation of self-interest of the individual. Some of these characteristics include attitudes of people, such as higher aversion to losses of wealth and possessions than to identical amounts of gains, or a bias towards an unlikely or a rare event, or any limitation of memory due to biological factors……. Read more at:-

http://theindianeconomist.com/the-idea-of-rationality-2/


 

Really radical economics April 24, 2016

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Odaa OromooTrickle down economics

 

 

At its root the economy is a living, complex organism. Rather than envisioning economic transformation as akin to overturning an unresponsive juggernaut, it may be more productive to see it in terms of tending to a fragile body. Avoiding drawing “us” versus “them” battle lines, and acting on the transformational potential that exists within the economy as it is right now, opens up new arenas for constructive action.  Now that would be radical.

 

Transformation doesn’t require an alternative “social economy,” because the economy we have is already social. We just need to recognize and act on that fact.

Source: Really radical economics

Economics: Traditional & Behavioural: System Thinking 1 &2 April 12, 2016

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Odaa OromooTraditional  and  Behavioural Economics, System Thnking 1 and 2

 

Traditional economics views humans as robotic machines who make calculated decisions based on logic. In contrast, behavioural economics views humans as irrational and emotional beings who are influenced by biases and experience when making decisions. This infographic takes a closer look at just what behavioural economics is and how it can be used.

Read more at:- https://www.b2binternational.com/publications/what-is-behavioural-economics/

 

Related:-

10 key economic concepts

10 key economic concepts

Ethiopia: The failed State’s Collapsing Economy April 8, 2016

Posted by OromianEconomist in Ethiopia's Colonizing Structure and the Development Problems of People of Oromia, Afar, Ogaden, Sidama, Southern Ethiopia and the Omo Valley, Free development vs authoritarian model.
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Odaa OromooThe TPLF Corruption network

Ethiopia: Double Digit Growth or Collapsing Economy?

Analysis by  Andualem Sisay,  All Africa, 8 April 2016


 

Ethiopian government’s increasing reliance on foreign loans is posing a serious risk of economic collapse, a renowned economist has revealed.

“Take for instance China, which has loaned over $17 billion to the Ethiopian government for infrastructure projects. Our total investment is 40 per cent of the GDP. Our saving is between 10-20 per cent of the GDP.

“We import $13 billion and export $3 billion. They are the ones who are filling all these deficit gaps,” said Dr Alemayehu Geda.

The Addis Ababa and London universities don was presenting his paper on Foreign Direct Investment (FDI) in Ethiopia and Credit Financing.

“What will happen if they stopped such financing tomorrow? What if, for instance, the Chinese government tomorrow says sell for me Ethio Telecom or sell to me Ethiopian Airlines or give me some share or buy my aeroplanes, or I will stop such credit financing?

Strategic items

“The country will collapse, I guarantee you,” he said.

Dr Alemayehu went on: “About 77 per cent of our imports are strategic items. Fuel only has 25 per cent share of the total import. As a result, even if we want to reduce these imports, we can’t. Ethiopia needs to minimise strategic vulnerability.”

The don elaborated giving the example of how the Koreans mitigated against such dependency risks when they used to source 75 per cent of their imports from the US some decades ago.

Dr Alemayehu presented his paper in Addis Ababa at the launch of a two-year 12 series of public dialogue by the Forum for Social Studies – a local civil society, partially financed by the UK’s Department for International Development (DfID).

 

“The Koreans came out of such vulnerability risk after analysing their situation properly, discussing the issue with their intellectuals and setting long term plans,” he said, advising the Ethiopian government to invest in quality education, skilled labour and improve the negotiations capacity as well as have in place a well-designed policy.

Last decade

Official estimates have shown the Ethiopian economy growing by double digits annually for about a decade now, a figure that has highly been doubted by independent scholars.

The Addis government has been applauded for growing the country’s GDP by around 10 per cent per year for the last decade.

In his paper, Dr Alemayehu indicated that Ethiopia’s external loan included $17.6 billion from China for various infrastructure developments, around $3 billion from Turkish and close to $1 billion from Indian governments.

The World Bank’s data shows that from 2012 – 2016, Ethiopia has taken a total loan of close to $6 billion from the global lender. Last year, Ethiopia for the first time, joined Euro Bond and accessed $1.5 billion.

In addition to loans, reports show that some $3 billion annually came to the country in the form of aid from donors.

Have declined

Ethiopia’s exports have declined from around $3 billion last year to around $2.5 billion this year, as revealed in the recent six-month report of the prime minister to the parliament.

Even though tax collection has been growing by an average of 20 per cent annually over the past five years, Ethiopia’s tax to GDP ratio still stands at 13 per cent, which is less than the around 16 per cent of the sub-Saharan average.

Last year, Ethiopia collected around $6 billion from tax, including $25 million recovered from contraband traders. The figure could have been raised by at least $3 billion had it not been for the generous tax incentives the country has provided to investors, according to latest report of the Ethiopian Revenue and Customs Authority (ERCA).

In only nine months of Ethiopia’s last budget (July 8, 2014 – July 7, 2015), the country provided tax incentives of around $2.4 billion to investors, by exempting them from customs and excise duties and withholding, VAT and surtaxes, according to ERCA’s report.

Financial integrity

A financial integrity report last December indicated that around $2 billion was leaving Ethiopia every year through mis-invoicing and other tax frauds.

When it comes to the FDI coming from China, India and Turkey, close to 71 per cent of their investments in Ethiopia were in the manufacturing sector.

However, job creation, technology transfer and export contribution were insignificant for Ethiopia, which has over an 90 million population dominated by the youth. The country has about 16 per cent unemployment rate, according to Dr Alemayehu.

Between 2003-2012, there were 93 Chinese companies that had reportedly invested $600 million, creating around 69,000 permanent and 79,000 temporary jobs for Ethiopians. There was little contribution to technology transfer and foreign currency generation through the exportation of their products.

According to Dr Alemayehu’s paper, during the same period, Indian investments in Ethiopia created 24,000 and 26,000 permanent and temporary jobs respectively, while 341 Turkish companies operating in Ethiopia created a total of 50,000 jobs.

Though much was being talked about Chinese investments growing in Africa, the Asian giant had less than 4 per cent of total share of FDI on the continent, out of the total stock of $554 billion worth in 2010. Most of the investments in Africa were still dominated by the Western companies, according to Dr Alemayehu.

Prime Minister Hailemariam Desalegn recently told the local media that Ethiopia’s GDP growth was not expected to record a double digit this year and would likely drop to around 7 per cent.

However, his special economic adviser with a ministerial docket, Dr Arkebe Equbay, reportedly told Bloomberg media that the economy was expected to grow by 11 per cent this year.

Foreign debts

The government was now expected to deal with puzzles such as why the economic performance was not as good as in the previous years, with all the generous incentives to investors and huge infrastructure investments mainly dependent on local and external loans?

How to repay its local and foreign debts before the lenders force the government to cede shares in its highly protected businesses, such as, Ethio Telecom, Ethiopian Airlines, the Commercial Bank of Ethiopia, the Ethiopian Insurance Corporation and Ethiopian Shipping Lines is, for sure, the elephant in the room.

But the big question is: How soon will these issues get the attention of a government pre-occupied with trying to feed about a dozen million people affected by drought and dealing with political unrest and conflicts mainly in Oromia and Gondar area of Amhara Region?


 

http://allafrica.com/stories/201604080259.html

THE ANIMAL SPIRITS February 28, 2016

Posted by OromianEconomist in Economics, Uncategorized.
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Odaa Oromoo

INTRODUCTION

 

The resources are scarce in comparison to our never ending wants andEconomics is concerned with the ‘rational’ management of these resources that have alternate uses to maximise the gains at both micro-macro level.

There are several economic models that have been developed that have distinct characteristics and unique features. Adam Smith’s Capitalist model, the one where the market forces of demand and supply move freely to determine the Equilibrium level represents an ideal system of want origin and its satisfaction in the perfect sense. Any extension of demand will shift the Equilibrium price upwards and this in turn, will motivate the ‘rational’ producers to supply more to the market at the increased price to maximise their profits. This will eventually stabilise the price and eventually Equilibrium will be restored in the market. How simple is that! This model seems stable and logical in every sense, doesn’t it?

Source: THE ANIMAL SPIRITS

Read more from the source

Econometrics Course Notes February 7, 2016

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Odaa Oromoo

Econometrics – the most practical part of any Economics course. Combining regression analysis with economic theory using real world data sets! This is what applied econometrics is all about!Feel free to download and share my course notes from EC2020 Elements of Econometrics.

https://powerofprice.wordpress.com/2016/01/27/econometrics-course-notes/

Source: Econometrics Course Notes

Markets, policy and sociology of economic immorality January 16, 2016

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Odaa OromooTrickle down economicsEconomic performance and size of government

 

 

In a society in which the money-maker has had no serious rival for repute and honor, the word ‘practical’ comes to mean useful for private gain, and ‘common sense,’ the sense to get ahead financially. The pursuit of the moneyed life is the commanding value, in relation to which the influence of other values has declined, so men easily become morally ruthless in the pursuit of easy money and fast estate-building…
A society that is in its higher circles and on its middle levels widely believed to be a network of smart rackets does not produce men with an inner moral sense; a society that is merely expedient does not produce men of conscience. A society that narrows the meaning of ‘success’ to the big money and in its terms condemns failure as the chief vice, raising money to the plane of absolute value, will produce the sharp operator and the shady deal. Blessed are the cynical, for only they have what it takes to succeed.” (C.Wright Mills 1956)

 

Source: Markets, policy and sociology of economic immorality

TPLF/EPRDF Ethiopian Regime is a Contra to a Developmental State January 12, 2016

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Odaa OromooThe TPLF Corruption network

 

TPLF/EPRDF Regime a Contra to a Developmental State

By Dr Barii Ayano, Economic Thinker

 

Introduction

One of the catchy phrases the TPLF/EPRDF regime leaders and their cadres often use to describe the regime is “limatawi mengist” or “developmental state”. However, the TPLF/EPRDF regime is not pursuing a development state economic model since the regime’s economic system does not meet standard features of a development state. Actually, the regime’s economy and its rhetoric are in contradiction with the conventional features of a developmental state enshrined in nation building and economic nationalism that unify a nation. There is difference between state-led developmental state and state-controlled and state-owned economy of TPLF-led regime. The regime’s rulers and bureaucrats have predatory and kleptocratic motives, which are fed by structural and institutional corruptions and rentseeking. Unlike a developmental state, which builds foundations for private entrepreneurship and innovative enterprises, Ethiopia’s monetized economy is dominated by interest groups affiliated or aligned with the regime such as REST. The regime marginalized and displaced most of the traditional entrepreneurial and business class. The foundation of Ethiopia’s economy under the current regime is not entrepreneurial or business skill but alliance with TPLF leaders. The leaders of the TPLF/EPRDF regime and interest groups aligned with them designed get-rich-quick schemes based on land grabs and cronyism, which have nothing to do with economic efficiency, entrepreneurship, innovative value adding, business acumens, etc. of a developmental state. Therefore, the regime’s leaders and their cadres use of the phrase ‘developmental state’ to the describe economy is similar to the regime’s leaders and their cadres use of the word ‘democracy’ to describe the current political system. It is also important to note that a developmental state is not always synonymous with authoritarianism and dictatorship, but many Asian states have been authoritarian to a degree, particularly at the earlier stages of development.

What is a Developmental State?

A developmental state is a term coined by Chalmers Johnson that is used to describe states which follow a particular model of economic planning and management. It was initially used to describe post World War II Japan and its rapid modernization and economic growth. It is the developmental state of Japan that led to innovative creation of world renowned Japanese brands such as Toyota, Honda, Mazda, Mitsubishi, Nisan, Sony, Toshiba, etc. Other examples often cited as developmental states include Singapore, Thailand, Taiwan, Malaysia, South Korea, and Indonesia. In terms of an economic jargon, a developmental state is a state where the government is intimately involved in the macro and micro economic planning in order to grow the economy whilst attempting to deploy its resources in developing better lives for the people. Developmental states invest and mobilize the majority of capital into the most promising sector of an economy that will have maximum spillover effect for the society and reduce the dislocations caused by shifts in investment and profits from old to new sectors. Such state plays the social engineering role to restructure the national economic system for promoting long-term (industrial) development. Thus it is based on combinations of nurturing innovative private enterprises as the key owners and the positive role of government via an ambition use of the interventionist power of the state and its fiscal and monetary policy to guide investment in a way that promotes economic solidarity of different interest groups based vision for national economy and its growth.

Key Features of a Developmental State

In order to understand the concept of a developmental state, it is important to highlight some of the characteristics of a developmental state. Although dictators pursuing developmental states generally believe that they will attain state legitimacy through delivery of services to citizens rather than through the ballot, they use economic nationalism to unify the nation based on a collective goal of economic development. Developmental states hugely invest in quality education, especially in technical fields in both domestic universities and overseas scholarship. This leads to the emergence of bureaucratic layers populated by extremely educated people, who have sufficient tools of analysis to be able to take economic leadership initiatives, based on sound scientific basis, at diverse levels of decision making within the government structure. Moreover, developmental states have been observed to be able to efficiently distribute and allocate resources and, therefore, invest optimally in critical areas that are the basis of growth such as education, research and development, infrastructure, etc. It is this ideology-structure nexus that distinguishes developmental states from other forms of states. Let me elaborate the ideology-structure nexus of a developmental state in two areas.

1. Economic Nationalism as an Ideology

The successful developmental states are based promoting economic nationalism as a unifying ideology. The state promotes economic nationalism as an essential keystone, which unifies different interest groups. A developmental state conceives economic development as its national mission and the mission of the country at large. Although a development state establishes its principle of legitimacy as its ability to promote sustained development, it does not alienate experts of diverse interest groups and political views in participating in economic nationalism since real development requires expertise for steady high rates of economic growth and structural change in the productive system, both domestically and in its comparative competition in the international economy. In spite of dictatorial development states control of political sphere, there is economic freedom where experts of diverse professions are able to establish an “ideological hegemony” based on economic nationalism to which key actors in the nation adhere voluntarily in order to contribute towards economic development for the benefits of their country. The main force behind the developmentalist ideology has usually been economic nationalism, inducing nations to seek to “catch up” with countries considered as more developed. It is essential to stress the ideological underpinnings of state policies knit together the ruling class and the ruled class of a country with economic nationalism as a unifying factor. In other words, the centrality of economic nationalism as an alternative ideology points to de-politicized national quest for economic development, which is driven by professional expertise with the help and support of a developmental state. The economy falls under some kind of technocratic governance of the best and the brightest a country can offer for economic development to carry out state policies that are good for the nation without focusing on cronyism and self-serving profiteering of politicians and their relatives. The TPLF-led regime does not function in this mindset. Economic development is not only a central preoccupation for political leaders but also by professional technocrats of a developmental state. Nationalist-cum-developmentalist ideology is used for both unifying nation building and economic development. Economic nationalism ideology is used to rally the masses for national unity and economic development. The centrality of economic development was such that it acquired the status of an ideology (“developmentalism”) national ideology, which seeks to subordinate the energy of the people behind a single national goal. Among others, the role of the government is maintaining public investment in infrastructure, research and development, and education to stimulate private investment, create skilled labor force and entrepreneurial class, etc. In the politics of nation building, the developmental state leadership focuses on the economics of nation building. In dictators-led developmental state leaders swear by economic growth and seem to view good growth indicators as the main source of their legitimacy. The developmental state is also committed to resolving conflicts in the on-going process of social restructuring as it tends to induce winners and losers in economic development. Conflict management in this regard involves ensuring that the benefits, expected benefits, of the growth process are widely shared and discussed among politicians, experts and the public. The developmental state is understood to be identified with its actual achievement of economic  growth, since its legitimacy stems from the significant improvement in standards of living for a broad cross section of society. Thus economic nationalism can include political interest groups molded into a developmental coalition for a common goal.

2. Developmental State-Structure: Professional Capacity Building

The state-structure of a developmental state emphasizes building structural capacity to implement economic policies sensibly and effectively. The capacity is determined by structural, institutional, technical, administrative, and political engagements and professional bureaucrats. Undergirding all these layers is the autonomy of the state from social forces so that it can use these capacities to devise long-term economic policies unfettered by private interests of corrupt politicians and unprofessional bureaucrats. The quest for a “strong state” in the development process is aligned with building administrative capacity more than the political ability to push through its developmental project using political power. The developmental state has some social anchoring that prevents it from using its autonomy in a predatory manner and enables it to gain devotion of key social actors. It does not rely on asymmetric nature of centre-periphery power relations, which tend to produce various class structures. Rather, it focuses on building capacity for appropriate state structures and functions that effectively promote development as a national goal. (See “a” and “b” below) The foundation to building a developmental state is to develop an educated population and a knowledgeable society with high levels of scientific literacy in building a knowledge economy based on professional business people and entrepreneurship. Economic nationalism leads to a harmonious society with a strategic partnership amongst labor, government, industry and society, which leads to a society that efficiently allocates and distributes resources.

a. Competent and Efficient Bureaucracy

It goes without saying that cooperation between state and major industries is crucial for maintaining stable macroeconomy since policies decided at the top levels of government are administered by middle-level bureaucrats. One of the main characteristics of a successful developmental state capacity building is creating an extensive bureaucratic layer consisting of mainly professional technocrats with highly developed economic and innovative visions, who are able to plan in large cycles that extend over long time periods. The bureaucrats also pay special attention to reconfiguring the social sphere so that the culture of appreciating the value of education is entrenched since technical education is the driver of increasing developmental capacity. For instance, in East Asia, the developmental state’s bureaucracy has several important characteristics. There was an extensive discourse on ‘developmentalism,’ the necessity of industrialization and of state intervention to promote it. The professional bureaucracy in Asia has a powerful social group of highly educated bureaucrats with predictable and coherent national interests. Thus, the public-private cooperation between the bureaucracy and business sector has been developed and refined through institutional adaptation over time, and responds flexibly to changing new realities in the respective country and international economic conditions. By and large, the behavior of Asian bureaucrats has been bound to the pursuit of collective goals rather than individual opportunities presented by the market, allowing the state to act with autonomy from certain societal pressures. The fact that formal competence, as opposed to clientelistic ties or loyalties, is the chief requirement for entry into the bureaucratic network makes it all the more valued among people. A competent and efficient bureaucracy dedicated to devising and implementing a planned process of economic development is central role of a developmental state. Developmental states staff the bureaucracy by the respective countries best human resources, who are charged with the task of directing the course of their countries’ development. Thus the chance to join the state bureaucracy has a high degree of prestige and professional legitimacy. This allows a developmental state not only to continue recruiting outstanding personnel, but also to utilize policy tools that tend to give them additional authority. As a result, the developmental state economies have developed the greatest state capacity not only to formulate development policies but also to implement them effectively to promote economic development. The TPLF-led regime has never nurtured bureaucratic professionalism but bureaucratic clientelism of loyal servants.

b. Embedded Autonomy of Professional Bureaucrats and Entrepreneurs

A competent and efficient bureaucracy under a developmental state is able to maintain effective relationship, especially regarding the direction and funding of investment projects, with the domestic business sector without direct intervention of the central government. Thus, the professional bureaucrats, entrepreneurs and the business sector have “embedded autonomy” when it comes to the relationship between the developmental state and the business sector. A successful developmental state needs to be sufficiently embedded in society so that it can achieve its development objectives by acting through “social infrastructure”, but not so close to business sector that it risks ‘capture’ by particular interest groups, which tend to lead to entrenched corruptions and rent-seeking. This no demarcation between the TPLF-led regime’s politics and the economy since politics and economy, including dominating economic ownership, are meshed together in Ethiopia-politics is economy; economy is politics.

TPLF-led Regime: A Kleptocratic State

The TPLF/EPRDF regime vividly lacks an ideology of development anchored in some form of economic nationalism that unifies Ethiopia as a collective goal. The government has not attempted to build national consensus on economic development of different interest groups with the exception of the Grand Ethiopian Renaissance Dam (GERD). Some argue that the GERD campaign by the regime is more for finance and political expedience than unifying the people under a national project. Economic growth rhetoric is sold as the domain and monopoly of the regime whereas the general public is ridiculously divided into “pro-development” and “anti-development”. And the opposition groups, by and large, fall under the category of “anti-development”. Surely, this is anti-thesis to a developmental state’s theme of building economic nationalism, which binds different interest groups of a country so that they all accept and take part in it as a collective national goal. Abay Tsehaye, in one of his interviews, clearly stated the economic goal of the regime in the long run. He stated that the regime has the agenda of creating an economically empowered class, which will control the economy and lead politics. This agenda has nothing to do with a developmental state agenda founded on building national consensus and economic nationalism as an ideology. The regime’s economic agenda is aligned with “divide-and-rule” and long term goal to lord over Ethiopia. Like the political goal of the regime, the economic agenda is also inherently discriminatory in its nature. In the lack of nurturing national development ideology and intrinsic one-party rule, loyalty to the regime easily overrides societal development goals. Individuals aligned with the regime often hold highly idiosyncratic mindset that they flout with impunity and with no moral qualms in politics, the economy and their general interaction with the business sector and the society at large. Consequently, TPLF/EPRDF regime’s leaders have no moral basis on which they could demand enthusiastic and internalized compliance to whatever “national project” they launch due to the lack of ideology of development, which addresses the public demand and national economic interests shared by all interest groups. Unlike the developmental state, the central political stage and layers of bureaucracies of the regime are not occupied by well educated professionals, who are guided by the aspirations of nation building and economic development. Loyalty is the major factor in bureaucratic appointments from top to the bottom, and hence most of the regime’s bureaucrats are less merited to occupy their offices. Rather than being competent and efficient bureaucracy, the processes of appointing less qualified individuals based on loyalty has led to an inescapable “development of underdevelopment” in Ethiopia’s bureaucracy, which in turn produced a series of political and economic contradictions and bureaucratic cronyism. Moreover, unlike a development state, the TPLF/EPRDF regime portrays foreign dependence syndrome, with a significant part of the regime’s budget covered by international budgetary aid. Externally dependent growth is not conducive for dynamic capital accumulation, which builds basis for a development state economy. Thus, even accepted at face value, equating the regime’s claimed booming economy of Ethiopia with a developmental state becomes problematic since the economy heavily depends on external factors, such as export of primary products and aid inflows.

TPLF-led State Controlled and Owned Economy

The institutional and economic structures of the regime are reinforced and constructed by political power to control the economy rather than developing national economic ideology or creating discourses with interest groups. Structural aspects of the regime’s economy include mass dislocation of society without offering alternative settings or means of survival. This kind of economic structure resembles settler colonial economy much more than a development state. This is most apparent in land-grab and the privileging of elements of the regime, their families and supporters. Access to politicians paves way for getting rich much more than individuals’ entrepreneurial and business skills. Large chunk of renowned entrepreneurs and business people have been forced to leave Ethiopia and migrate to other countries. The economic system and its bureaucracy are structured as a predatory state, where top rulers and layers of bureaucracy have predatory motives, and hence less willing to part with corruptions and rent-seeking. The aim of regime is to exploit the physical, human, and economic resources for the benefit the leaders of the regime and few others aligned with them. The economic goals of regime are simple. It is to provide maximum economic benefit to the individuals in power at the expense of the majority. Like colonial settlers, the individual needs of their subjects are neither important nor part of their economic goals. The imposition of economic policy is often arbitrary and unrelated to any real need of the majority of the people. This led to inadequacy of the food entitlements and chronic malnutrition and famine. Unlike a development state’s national development driven by all-encompassing economic nationalism, the TPLF/EPRDF regime’s economic agenda is more about economic subjugation and about the regime’s ability to control of the economy. Improving the production methods and strengthening national economy for all people are not the priorities. It’s all about empowering the likes of REST to be unchallengeable economic giants of Ethiopia. There is a crystal clear lack of autonomy of the business sector due to the unholy relationship of state-society and state-business under the TPLF-EPRDF regime. There is bureaucratic malaise into both market and state structures and it has eaten into the very core of the edifice of modern administration rendering it both weak and incoherent, at best. Mired in clientelism, the state has not been able to provide the bureaucratic order and predictability that business sector and entrepreneurs need to engage in long-term investment and contribute to long-term national development. TPLF-led regime is literally driven interest groups and mired in state-clientelist relationships. And hence it is even lacking in “stateness” in a strict sense of the word. Self-interest groups which control the state adopt policies that generated rents for them. The TPLF/EPRDF state is essentially a rent generating institution that inhibited efficient allocation of resources. Rent seeking usually involves redistribution of income from one group to another, and in Ethiopia, it is redistribution from poor to the rich through corruptions and rent-seeking. Let alone being a development state, the regime cannot pursue the collective task of development in the long run. It has crushed most of the strategies and institutions that build a solid foundation for development. State-society relationships are inherent to national development, and mistrust runs both ways-the regime does not trust the people and the people don’t trust the regime.

 Conclusion

The developmental state refers to the collective economic and human development via state’s essential role in harnessing national human, financial, etc. resources and directing incentives through a distinctive policy-making process. The foundation for building a developmental state is the ability to establish nationalist educated population by creating a harmonious society with strategic partnerships amongst labor, government, industry and society as well as efficiently allocating and distributing resources. The success of the developmental state also stems from the ‘embedded autonomy,’ in which the developmental state is linked intimately with the private sector but preserves sufficient distance for the renegotiation of goals and policies when capital interests are inconsistent with national development. The key government actors under the TPLF-led are irredeemably greedy, corrupt and captured by rent seekers and economies of personal wealth accumulation, and hence focus on promoting vested interests over national development. They don’t think creatively of modes of social organization at both macro and micro level that can extricate Ethiopia from poverty and lead it to the long term path of development. Appropriate institutional structures do not exist in Ethiopia to socially engineer a developmental state since a development state is a social construct consciously brought about by a state, its bureaucracy and societies. Economic nationalism of a developmental state cannot take root. We cannot draw parallels between TPLF-led regime and developmental states implemented in Asia. Unlike TPLF, Asian dictators were/are very nationalist with the goal to change the living standard of their people and promote their countries in the world. TPLF leaders have beef with most of the people in Ethiopia such as Oromos and Amaras. TPLF’s governance resembles settler colonialism of the apartheid system in South Africa and British land-grab system in Rhodesia (now Zimbabwe) much more than the developmental state systems in Asia. The regime does not pursue collective economic empowerment agenda. In dictatorial developmental states, even where was no political freedom but people had economic freedom. Under the TPLF/EPRDF regime, there is neither political nor economic freedom. Discriminatory economic policies, with enclave economy nature, are more aligned to colonial policies. TPLF governance is unequivocally becoming ethnic apartheid in political, economic, etc. fronts. Its policies are designed to marginalize dissenting people from economic benefits and then to impoverish them for long term political and economic control whereas the leaders and their relatives profiteering through deeply entrenched cronyism. Developmental state dictators in Asia were not consumed by self-enriching schemes via corruptions and rent-seeking. Actually, the Asian dictators were very tough on corrupted individuals, politicians, etc. Although they did not stop it, corruption leads to very long imprisonments. But people join the TPLF/EPRDF regime to get license to be corrupt and rent-seeker without any repercussion. The TPLF –led regime is structurally and institutionally corrupt, which was not the case under Asian developmental state system. Finally, the TPLF-led regime is weak, over-extended, and interfere with the smooth functioning of the markets with its repressive characters and draconian policies. It heavily depends on foreign powers for its existence. Therefore, it is not an example of a developmental state by any account. I think phrases like the “rentier state”, the “overextended state”, the “parasitical state”, the “predatory state”, the “crony state”, and the “kleptocratic state” better fit the TPLF/EPRDF regime. I think it is a kleptocratic state/autocracy (rule by thieves) made up of very greedy individuals addicted to personal wealth accumulation through structured and institutionalized corruptions and rent-seeking.

The article is originally published at:-

TPLF-led Regime is not a Developmental State

 

Related article:

https://oromianeconomist.wordpress.com/2014/08/14/the-conflict-between-the-ethiopian-state-and-the-oromo-people-by-dr-alemayehu-kumsa/

 

 

 

 

 

 

 

 

 

Ethiopia: Forex Crunch Choking Businesses in the Country January 10, 2016

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Odaa OromooEconomic performance and size of governmentThis is the Ethiopian capital Addis Ababa (Finfinne) where the population of the early morning standing in long lines under the blazing sun (Sunday August 2015) for the purchase of sugar, oil and other basic goods

(Addis Fortune) — Ethiopia’s foreign currency supply available for importers and travellers alike is increasingly facing chronic shortages, claims an importer engaged in trading of household appliances from Asian countries, while opting to speak to Fortune on conditions of anonymity. As the country’s foreign exchange provision plummets into a whirlpool, the parallel or black market for hard foreign currency (which has become a rare commodity), is thriving in the country.

The forex shortage is so critical that opening a Letter of Credit (LC) takes as long as one year or even more, and even then, there is no guarantee that the requested amount of foreign currency will be availed, the importer complained.

His is not the sole voice of concern with the increasing scarcity of foreign currency in Ethiopia, as his view is also shared by a senior executive of a private bank and an economics lecturer, who also chose to speak anonymously to Fortune. They argue that basic economic principles of supply and demand suffice to explain the ongoing critical shortfall of forex in Ethiopia.

Both the banker and economist posited three basic factors: global economic slowdown, Ethiopia’s mega projects consuming huge loads of hard currency and the country’s widening trade balance, as the genesis of the shortage.

As the world still reels from the financial meltdown of 2008 and the subsequent global economic slowdown, it has negatively affected and upset long term foreign investment in the country, the banker and economist argued. However, a recent study by the United Nations Conference on Trade & Development (UNCTAD) discovered that Ethiopia is actually the third largest recipient of Foreign Direct Investment (FDI) in Africa, with inflows of 953 million dollars in 2014 and 279 million dollars in 2013, highlighting a rapidly rising trend.

Ethiopia’s mega projects in hydroelectric generation, sugar production, and rail transport, continue to drain the country’s hard currency reserves, with high demand for public investment, the experts argued. Import of capital goods and construction-related services increased sharply in Ethiopia according to a June 2015 IMF report, utilising large sums of hard currency.

In line with the country’s development endeavours, the National Bank of Ethiopia (NBE) has a policy of prioritising provision of foreign exchange for selected goods and services based on a designated priority, which shuns other imports, the banker explained. The mega projects top the priority list and drain the country’s forex reserves.

In addition to the impact of the country’s mega projects taking a rather large chunk of the highly limited forex reserve, Ethiopia’s trade balance is also one of the major factors affecting the availability of hard currency.

Though Ethiopia’s exports have registered growth over the past years, the growth rate of its imports has been at a much faster pace, resulting in an ever widening gap in the overall trade balance of the country.

Reports by NBE indicate that though the country’s export trade has been registering steady growth in the recent past, with exports worth roughly two billion dollars in 2009/10, increased to 3.25 billion dollars in 2013/14 and more than 1.6 billion dollars in the first two quarters of the current fiscal year, the country’s imports have skyrocketed at an alarming rate.

NBE’s data show that Ethiopia’s imports have maintained a robust course of growth over the years as the country imported goods worth roughly 8.27 billion dollars in 2009/10, increased to 13.72 billion dollars in 2013/14 and well over eight billion dollars in the first two quarters of the current fiscal year.

The national bank’s data also highlight the distressingly widening trade imbalance which continues to haunt Ethiopia’s balance of trade. As such, the trade deficit was put at an estimated -6.27 billion dollars in 2009/10, -10.47 billion dollars in 2013/14 and roughly -6.6 billion dollars for only the first two quarters of 2015.

This imbalance has partly been caused as a result of slow-evolving export growth rates with falling commodity prices and lack of diversification in exports, loopholes underscored by the International Monetary Fund’s (IMF) report.

But beyond the basic economic principles of demand and supply used as tools to explain the shortage of forex, other variables are worth exploring to get the picture of the problem in its entirety.

One important aspect is the proliferation of the black market and shady business deals between businesspeople and bankers. As anxious importers are willing to pay whatever cost they are made to pay to avoid penalties during delivery of imported goods, and as some corrupt bank staff and managers take advantage of the situation, the forex shortage has worsened.

Fortune spoke to a dealer, who, on conditions of anonymity, explained some of the processes in which brokers, importers, exporters and bankers engage, to facilitate the provision of forex at a faster time interval than normal. He stated that the deals take place underground but strictly follow legal procedural steps. This makes the whole process virtually undetectable by regulations of the national bank.

At the current going rate, a person who wants to get forex ahead of the pack, has to pay as much as three Birr for every dollar they request in their LC, the dealer told Fortune. His job is to bring together the bankers and the importers and the deal will be done. He also explained a different, still illegal, mode of acquiring forex employed in the context of secret partnerships between corrupt importers, exporters and bankers.

In this case, the dealer negotiates a proposal between an exporter and an importer where the latter will make use of the export earnings of the former, by paying the current going rate for every dollar used. The dealer once again negotiates the proposed scheme with the bankers and once on board, they jointly facilitate the importers’ access to hard currency.

The lack of transparency in opening LCs has cast an ominous shadow on the industry, according to several importers and the banker who spoke with Fortune. NBE recently took a highly publicised measure against the Cooperative Bank of Oromia for alleged mishandling of forex involving LCs.

One importer noted that a growing number of suppliers in Asia are now rejecting LCs opened in certain banks from Ethiopia, due to unpaid credits, emboldening his opinion that unless the regulatory state apparatus takes a serious overhaul at the forex provision, darker days are yet to come.

Travellers are also feeling the brunt of the forex crunch. As one traveller put it, she considers herself lucky if she can get 500 dollars from banks for a travel visa. The chronic shortage, she adds, has fed the parallel market for forex and its proportions and ramifications on the country’s economy are growing daily.

The CIA’s Factbook showed Ethiopia’s reserve of foreign exchange and gold was 3.785 billion dollars at the end of 2014. International financial institutions such as IMF have stated that they support the national bank’s objective of having foreign exchange reserves to cover three months of imports – but the central bank has so far, failed to respond to any of the questions Fortune had regarding the overall forex shortage in the country, including the state of forex reserves.

In addition to racking up the reserves, NBE should proactively counter all the shady business deals now widespread in the banking sector to cut the business community and the overall economy of the country, some slack.

Related:-

Ethiopia: The chronic shortage economy: What is the price and utility of a kilo of Sugar in Finfinnee (Addis Ababa) in terms of never ending queue?

https://oromianeconomist.wordpress.com/2015/08/27/ethiopia-the-chronic-shortage-economy-what-is-the-price-and-utility-of-a-kilo-of-sugar-in-finfinnee-addis-ababa-in-terms-of-never-ending-queue/

Ethiopia’s fake economic growth borrows from ENRON’s accounting December 28, 2015

Posted by OromianEconomist in Uncategorized.
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Odaa Oromoo

the-grim-reality-behind-ethiopia-rise-hype1ethiopia_03Dounle digit EthiopiaEthiopia is the one of the lowest in social Progress 2015

Ethiopia’s fake economic growth borrows from ENRON’s accounting

J Bonsa analyses Ethiopia’s economic growth over the last ten years.  Africa At LSE

More than 70 people have been killed and dozens wounded in an ongoing crackdown on peaceful protesters in Oromia. One of the underlying causes of the prevailing tense political situation is Ethiopia’s bogus claim about “miraculous” economic growth in the last decade.

The youth is not benefitting from the country’s supposed growth and doesn’t anticipate the fulfillment of those promises given the pervasive nepotism and crony capitalism that underpins Ethiopia’s developmentalism.

Courtesy: OPride

Courtesy: OPride

The ruling Ethiopian People’s Revolutionary Democratic Front (EPRDF) came to power in 1991 and briefly experimented with democratic transition. However, a little over a decade into its rule, the party’s former strongman, the late Meles Zenawi, realized that their pretentious experiment with liberal democracy was not working. Zenawi then crafted a dubious concept called, “developmental state.”

Stripped of the accompanying jargon and undue sophistication, Zenawi was simply saying that he had abandoned the democratic route but would seek legitimacy through economic development guided by a strong hand of the state. This was a ploy, the last ditch attempt to extend EPRDF’s rule indefinitely.

Using fabricated economic data to seek legitimacy and attract foreign direct investments, the regime then advanced narratives about its double-digit economic growth, described with such catchphrases as Ethiopia rising, the fastest growing economy in the world and African lioness. The claims that EPRDF has delivered economic growth at miraculous scales has always been reported with a reminder that it takes several decades to build democratic governance. The underlining assumption was that, as long as they deliver economic growth, Ethiopia’s leaders could be excused on the lack of democracy and human rights abuses associated with the need for government intervention in the economy.

EPRDF spent millions to retain the services of expensive and well-connected Western lobbying firms to promote this narrative and create a positive image of the country. These investments were also accompanied with a tight grip on the local media, including depriving foreign reporters’ access if they cross the government line. Ethiopia’s communication apparatus was so successful that even serious reporters and analysts started to accept and promote EPRDF’s narrative on rapid economic growth.

However, a few recent events have tested the truthfulness of Ethiopia’s economic rise. Drought and the resulting famine remain the Achilles heels of the EPRDF government. The government can manipulate data on any other sector, including the aggregate Gross Domestic Product, and get away with it, but agriculture is a tricky sector whose output is not so easy to lie about. The proof lies in the availability of food in the market, providing the absolute minimum subsistence for the rural and urban population.

The sudden translation of drought into famine raises serious questions.  For example, it is proving difficult to reconcile the country’s double-digit economic growth with the fact that about 15 million Ethiopians are currently in need of emergency food aid.

Rampant famine

Except for some gullible foreign reporters or parachute consultants, who visit Addis Ababa and depart within days, serious analysts and students of Ethiopian economy know that authorities have often fabricated economic statistics in order to generate fake GDP growth.  To the trained eye, it does not take a lot to find inconsistencies in the data series. In fact, Ethiopia’s economic growth calculus is so reminiscent of Enron accounting.  (See my recent pieces questioning EPRDF’s economic policies, including anomalies in the alleged achievements of millennium development goals, crony businesses, devaluation, external tradeand finance.)

The tacit understanding in using GDP as a measure of economic growth is that responsible governments generate such data by applying viable international standards and subjecting the data to scrutiny and consistency checks.

Unfortunately, these standards are not foolproof; irresponsible governments with mischievous motives can abuse them. There is credible evidence that shows Ethiopian authorities deliberately inflated economic statistics to promote feel-good, success stories.

Let’s take the agricultural data, which is timely and topical given the ongoing famine. This came to light recently as the European Union tried to understand anomalies in Ethiopia’s grain market, particularly persistent food inflation which the EU found incompatible with the agricultural output reported by the Central Statistical Authority (CSA) of Ethiopia.

The EU’s Joint Research Centre (JRC) then developed the technical specification for studying the scope of the Cereal Availability Study in order to account for the developments in the Ethiopian cereal markets. The International Food Policy Research Institute (IFPRI) was selected to carry out the study.

ethiopiagraph_images_growth1Figure 1 (above) compares the EU-sponsored survey and the Ethiopian government’s survey produced by the CSA. I am using the data for 2007/08 for comparison. The negative numbers indicate that the IFPRI estimates were consistently lower than the CSA data. For instance, CSA overstated cereal production by 34 percent on average.  This ranged from 29 percent for maize to 44 percent for sorghum. The actual amount of Teff produced is lower by a third of what’s reported by the CSA.

The research team sought to explain this “puzzle” by examining the sources of the confusion, the methodological flaws that might have led CSA to generate such exaggerated economic data. Toward that end, they compared CSA’s crop yield estimates with comparable data from three neighboring countries:  Kenya, Tanzania, and Uganda (see Figure 2).

ethiopiagraph_images_growth2

From 2000 to 2007, the average increase in cereal yield for these countries, including Ethiopia, was 19 percent. Yet the CSA reported a whopping 66 percent for Ethiopia’s yield growth. The country was not experiencing an agricultural revolution to justify such phenomenal growth.  It is unrealistic that Ethiopia’s yield growth would be greater than the neighboring East African countries, particularly Kenya, where the agricultural sector is at a much more advanced stage. If anything, the reality in Ethiopia is closer to Uganda, which did not report any yield increase during that period.

This reveals the extents of data manipulation by Ethiopian authorities to create an inexistent economic success story and seeks political legitimacy using a bogus record. We now know the widespread distortions in official statistics on cereal production thanks, in no small part, to EU’s intervention in sponsoring a study and explaining the disparities. Cereals represent only a sub-sector in the agricultural realm. It is likely that worse distortions would be revealed if similar studies were done on Ethiopia’s growth statistics in other sectors, including manufacturing and service divisions.

‘Poverty reduction’

The IMF has praised Ethiopia for achieving accelerated growth with a focus on equity and poverty reduction, a challenging dilemma for most countries. However, a closer look at three interconnected facts turns this claim on its head.

First, as noted above, Ethiopia’s agricultural output has been inflated by 34 percent on average. Second, a33 percent poverty reduction since 2000 is widely reported. Third, there is a consensus that poverty reduction has happened mostly in rural Ethiopia. Now we put these three facts together and apply a simple logic to establish that the 33 percent poverty reduction is explained by the 34 percent exaggerated agricultural outputs. Notice that it is not by accident that the two percentage points are almost identical. Therefore, the ups and downs cancel each other out. In the best-case scenario, poverty rate must remain at the same level as in 2000.

The World Bank, IMF and other donors have often anchored their conclusions on poverty reduction on alleged changes in the agricultural sector, where the bulk of the poor live and work. Little do they know that the data they used to compute the poverty index comes from agricultural statistics with hugely inflated yield assumptions as shown above.

This raises the question: where has the billions of dollars in bilateral and multilateral aid pumped into Ethiopia in the name of poverty reduction and the millennium development goals gone?

‘The enclave economy’

The ‘Ethiopia rising’ storyline is a standard set by foreign correspondents who often repurpose official government press releases, or reports based on the construction projects in the capital, Addis Ababa.

For example, Bloomberg Africa’s William Davison, often uses the proliferating high-rise buildings in Addis Ababa as tangible evidence of Ethiopia’s double-digit economic growth. In his latest whitewash, Davison writes, “such growth is already visible in parts of the capital, where shopping malls and luxury hotels are sprouting up.” That a veteran reporter for a business website unashamedly passes judgment on economic success by referring to heights and width of buildings underscores his shallow understanding of the country’s social and political fabric.

Here are some of the questions that reporters aren’t asking and seeking answers for:  Who owns those building?  Where did the investment money come from?  Are there any firm linkages between these physical infrastructures and the rest of the Ethiopian economy? I have partially answered some of these questions in a previous piece and will soon provide additional insights.

For now, I would like to draw attention to the existence of an “enclave economy” within the mainstream Ethiopian economy. This enclave is made up of highly interconnected crony businesses, which are owned and operated by Tigrean elites, who also have a tight grip on the political and military command structures. Take, for example, the Endowment Fund for Rehabilitation of Tigray (EFFORT), a business conglomerate affiliated with the Tigrean People’s Liberation Front (TPLF). EFFORT has its humble origin in the relief and rehabilitation arm of the TPLF. However, it has undergone amorphous growth and now controls the commanding heights of the Ethiopian economy. By some estimates, EFFORT now controls more than 66 business entities.

The EFFORT controlled enclave and related military engineering complexes have created a semi-autonomous economy in Ethiopia. They made smart choices and specialized in engineering and construction businesses. This means they do not have to rely on the Ethiopian public for their products; instead, each specialize in separate industrial branches and buy from each other and also sell to the government, which is also in their hand. The huge government infrastructural projects necessitated by the “developmental state” model create business opportunities for these engineering companies.

The enclave economy is only loosely linked to the mainstream economy and it does not benefit the bulk of the Ethiopian people in any meaningful way. The luxury hotels and supermarkets that Davison refers to cater for the needs of the affluent business classes, their families, and the expatriate community.

In other words, Ethiopia’s miraculous economic growth, if it in fact exists, must have happened only in the enclave economy. Statistically, it is possible to generate a double-digit economic growth at the national level through a combination of some real astronomical growth in the enclave component and stagnation or declines hidden, through some accounting tricks, in the rest of the economy.

Lock-in style of reporting

Unfortunately, the unquestioned reporting on Ethiopia’s economic success has continued. Even the EU study appears to have been shelved, or deliberately ignored despite the significant findings. Even as a fifth of the population is in need of emergency aid, the World Bank is sticking with the outdated data and has recently released a sensationalized report entitled “Ethiopia’s Great Run: the growth acceleration and how to pace it.”

The ensuing famine has shaken the foundation of Ethiopia’s growth narrative, yet western NGOs and media outlets appear to suffer from the lock-in effect in adopting consistent storylines. They continue to link and refer to the World Bank, IMF and others reports and indexes by multilateral organizations.

That’s why we continue to see comical headlines such as “Ethiopian Drought Threatens Growth as Cattle Die, Crops Fail,” which assumes that Ethiopia’s growth is actually occurring. This acquiescence does not only display ignorance, but it also underscores an effort to evade accountability for previous mistakes and failure to report accurate information.

In a recent interview with The Ethiopian Reporter, Prime Minister Hailemariam Desalegn made a rare and fateful admission: “if we crave for too much praise for our achievements, we might run the risk of undermining the challenges we are facing. These challenges could grow bigger and become irreversible and that would be detrimental.”

Over the past 25 years, the EPRDF worked tirelessly to create a distorted image of the country and began craving and lobbying foreigners for praises.

Enron’s success involved an elaborate scam, but the firm was named “America’s Most Innovative Company” for six consecutive years. This fame did not stop Enron from crumbling. EPRDF’s fate will not be any different. The Oromo uprising has already started the unraveling of its elaborate scams devised to attain legitimacy on the back of non-existent economic and democratic advancement.

 J. Bonsa is a researcher based in Asia.

 

This article was first published on OPride.

 

http://blogs.lse.ac.uk/africaatlse/2015/12/24/ethiopias-fake-economic-growth-borrows-from-enrons-accounting/

Childhood Education and the Rates of Returns to Human Capital Investment: How your early childhood shapes your brain December 11, 2015

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How your early childhood shapes your brain

Did you know that investments in early childhood are crucial for achieving the brain’s full developmental potential and resilience?

Jim Heckman, Nobel Laureate in economics, and his collaborators have shown that strong foundational skills built in early childhood are crucial for socio-economic success. These foundational skills lead to a self-reinforcing motivation to learn so that “skills beget skills”. This leads to better-paying jobs, healthier lifestyle choices, greater social participation, and more productive societies. Growing research also reveals that these benefits are linked to the important role that early foundations of cognitive and socio-emotional abilities play on healthy brain development across the human lifespan.

Brain complexity –the diversity and complexity of neural pathways and networks— is moulded during childhood and has a lasting impact on the development of cognitive and socio-emotional human abilities.

151204-early childhood development return on investment
Early life experiences affect childhood development through changes in brain structure and function

The first one thousand days of a person’s life is a window of opportunity for investments that will lead to health and productivity. The quality of nurturing environments, in particular, preschool experiences and the interactions with adults and peers during childhood, shapes cognitive and socio-emotional skills.

Childhood cognitive abilities provide a foundation for adult cognitive functions. This means that successful brain development ensures that children develop basic cognitive abilities. The so-called “fluid abilities” (such as memory, reasoning, speed of thought and problem solving ability), which underlie high-level cognitive processes, are used to acquire new knowledge, tackle novel problems, and reasoning.

Fluid abilities tend to correlate with each other (i.e. individuals who perform well in one domain have a tendency to perform well in other domains) and intertwine to form a person’s general cognitive ability or intelligence. While there are substantial individual differences in cognitive functioning across the life-span, on average, knowledge-based abilities remain relatively stable into late-life. In addition, fluid abilities start to decline in mid-life and more so during advanced aging.

We are more likely to develop pathologies (diseases) with aging

Aging erodes structural and functional brain integrity.  One such cognitive disorder of the aging brain is dementia, the incidence of which increases exponentially with age. It is the leading cause of loss of independent functioning and requirement for institutional care in old age.

Alzheimer’s disease is the most common cause of dementia. The number of people living with dementia worldwide is currently estimated at 47 million –nearly 60% of cases occur in low- and middle-income countries — and is expected to triple by 2050 with increasing life expectancies around the globe. Some of the mainchallenges associated with dementia are the economic impact on families, caregivers, and communities, associated stigma, and social exclusion.

An adequate early childhood environment and strong foundational cognitive abilities protect against the risks of the aging brain. A healthy and active brain, shaped byadequate nutrition and safe and enriching environments in early-life, enables the retention of brain functions across a lifespan.

The peak level of fluid cognitive abilities is shaped, in part, by early childhood cognition and is one of the major factors in determining cognitive aging trajectories. Multiple complex pathways underlie this association, which also explains why childhood cognitive abilities provide, partly via higher educational achievement, entry into better jobs and healthier environments.

The resilient brain

Optimal brain development provides an individual with a greater number of neurons, more synapses (neural connections), and multiple pathways to perform any given task. Such “neuronal redundancy” comes in handy when a person is faced with deleterious brain aging.

More importantly, an increasing number of studies suggest that early childhood interventions targeting mental domains might increase maximum life-time cognition, potentially reduce the trajectory of cognitive decline in late-life, and even postpone the point at which cognitive deficits first appear.

Evidence from this research is inspiring innovations to make brain development a central element in early childhood programs in developing countries. In Colombia, a World Bank pilot program showed caregivers how to stimulate young children using play and talk. A rigorous evaluation shows that it improved their ability to understand and process what they hear or read. A follow up study is being planned to see if the gains have been sustained over the medium term.

In Kenya, researchers are studying whether giving storybooks to poor households helps improve children’s readiness to succeed by stimulating visual and cognitive brain development. In Bangladesh, another study examines whether getting parents to play and sing to their young children helps their brain development by building positive bonds with them.

Studies and increasingly interventions across several disciplines – neuroscience, health, education, economics, and psychology- provide evidence that early and sustained investments in human development are key for our neurons, our brains, for us as individuals, and for our societies. They lay the foundations for our capacity to achieve and to function well despite social or even biological obstacles throughout one’s life course.

Is there a link between the early foundations of brain development and the capacity to recover from adversity? What is the role of socio-emotional development? Advances in the brain sciences show that, indeed, individuals with a good head start in brain development are more resilient to potential mid-life adversities and the aging process.

In our next blog, we will look into new evidence from the fields of neuroscience and psychology. We will write about ‘resilient brain aging’ and the catalytic role of an adequate early-life environment for developing full brain potential.  Please check back next week to find out more about the link between socio-emotional abilities and the resilient brain.

 

Author: Dorota Chapko is a PhD candidate in Public Health at the University of Aberdeen. Omar Arias is acting sector manager and lead economist in the Human Development Economics Unit for the World Bank Europe and Central Asia region

https://agenda.weforum.org/2015/12/how-your-early-childhood-shapes-your-brain/?utm_content=buffer8f58b&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

Aggregate Demand and Spending Decision November 29, 2015

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Odaa OromooThe economic (business cycle)

Aggregate demand is the total amount that consumers, businesses, government, and foreigners are willing to spend on all goods and services in the economy. Changes in aggregate demand occur when any or all of these groups expand or cut back their spending plans. These changes range from:

An increase in consumption that may be caused by

  • a rise in income levels,
  • a decrease in interest rates,
  • a house price inflation.
  • a rise in the level of government spending.
  • a balance of payments surplus.

What Happens If An Increase In Aggregate Demand Occurs?

Suppose that the economy is in “normal times,” neither in a recession nor in a boom, so that real GDP equals potential GDP. In theory, firms could respond to the greater demand for their goods either by expanding output or by raising prices. In practice, firms do not raise prices in the short run. Instead, they expand output, and the economy enters a boom.

But prices are not fixed forever. Over time, if demand stays high, firms raise their prices and the boom ends. If aggregate demand falls, the reverse occurs. In the short run, firms lower output instead of cutting prices, and the economy enters a recession. Over time, if demand stays low, prices fall and the economy recovers. Read more at:-

Source: Aggregate Demand and Spending Decision

Why trickle-down economics won’t eliminate poverty November 23, 2015

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Odaa OromooTrickle down economicsEconomic output and global creative index

 

When it comes to eliminating poverty, the degree to which the benefits of growth are shared can have a significant impact on outcomes. According to Martin Ravallion, the former head of research at the World Bank, as cited in The Economist, a 1% increase in incomes in the most unequal countries produces a mere 0.6% reduction in poverty; however in the most equal countries, it yields a 4.3% cut. In other words, societies can get much more ‘bang from a boom’ if they ensure benefits are more widely shared.This brings us to the point at which trickle-down theory ends and inclusive growth begins. According to the Organisation for Economic Cooperation and Development (OECD), inclusive growth is “a new approach to economic growth that aims to improve living standards and share the benefits of increased prosperity more evenly across social groups”.Inclusive growth refers to both the pace and pattern of growth, which are considered interlinked and therefore need to be addressed together. Inclusiveness represents equality of opportunity in terms of access to markets, resources and an unbiased regulatory environment for businesses and individuals. In a nutshell, it is not just about the quantity of growth within our economies and societies, but also about its quality.

Source: Why trickle-down economics won’t eliminate poverty

The 2015 annual Prosperity Index:Ethiopia ranks 126, coming in at 17 of the bottom 20 least most prosperous countries, and 137th in a sub-category that measures Entrepreneurship & opportunity. Theranking has named Norway as the world’s most prosperous economy. November 5, 2015

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???????????Legatum prosperity index 2015Legatum prosperity index 2014 bottom 20

 

Ethiopia ranked 126 out of 142 countries on a new prosperity index, and  137th in a sub-category that measures Entrepreneurship & opportunity. The index ranked Ethiopia 132nd in education.

The index was released by the London based  The Legatum Institute on 2nd November 2015. According to the institute, the index assesses how prosperous an economy is based on more than just macroeconomic factors – it also takes into account wellbeing. Using rigorous research and in-depth analysis, the Index ranks countries based on their performance in eight sub‐indices—Economy, Entrepreneurship & Opportunity, Governance, Education, Personal Freedom, Health, Safety & Security and Social Capital.

The Index assesses 142 countries, representing more than 96% of the world’s population and 99% of the world’s GDP.

The latest ranking has named Norway as the world’s most prosperous economy. Norway topped the list for the seventh consecutive year. Along with Norway, three other Scandinavian countries (Denmark, Sweden, and Finland) made the top 10, and Iceland (another Scandinavian country) coming in at number 12, behind the United States, in the top 20.

Ethiopia ranks 126, coming in at 17 of the bottom 20 least most prosperous  countries. Ethiopia is ranked between Nigeria (125th) and Republic of Congo (127). The bottom 20 nations are mostly  sub Saharan African countries, with the exception of  countries like Afghanistan (141), Syria (136), Yemen (135), Pakistan (130), and Iraq (123).

The least prosperous nation of all the 142 nations sampled for the second year in a row is the Central African Republic.

In terms of specific sub categories of performance, the following countries were ranked number 1 in the world:

1. Economy: Singapore

2. Entrepreneurship & Opportunity: Sweden

3. Governance: Switzerland

4. Education: Australia

5. Health: United States

6. Safety & Security: Hong Kong

7. Personal Freedom: Canada

8. Social Capital: New Zealand

 

 

See interactive rankings table in the following link:-

http://prosperity.com/#!/ranking

In drought (famine) ravaged Ethiopia there is a thin line between life and death. The last decent rains fell here two years ago. Families watch their animals die and wonder if they are next. October 22, 2015

Posted by OromianEconomist in Famine in Ethiopia, Food Production, Free development vs authoritarian model, Illicit financial outflows from Ethiopia, Land Grabs in Africa.
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???????????Famine in Ethiopia 2015povertyAfrica is still struggling with povertyTPLF Ethiopian forces destroyed Oromo houses in Ada'a district, Central Oromia, July 2015Tigrean Neftengna's land grabbing and the Addis Ababa Master plan for Oormo genocide

“…UN now warning that without action some “15 million people will require food assistance” next year, more than inside war-torn Syria.  ….Hardest-hit areas are Ethiopia’s eastern Afar and southern Somali regions, while water supplies are also unusually low in central and eastern Oromo region.” Unicef

Millions hungry as Ethiopia drought bites

(Unicef,  News24, October 22,  2015): The number of hungry Ethiopians needing food aid has risen sharply due to poor rains and the El Nino weather phenomenon with around 7.5 million people now in need, aid officials said on Friday.

That number has nearly doubled since August, when the United Nations said 4.5 million were in need – with the UN now warning that without action some “15 million people will require food assistance” next year, more than inside war-torn Syria.

“Without a robust response supported by the international community, there is a high probability of a significant food insecurity and nutrition disaster,” the UN Office for the Coordination of Humanitarian Affairs, OCHA, said in a report.

The UN children’s agency, Unicef, warns over 300 000 children are severely malnourished.

The Famine Early Warning Systems Network (FEWS NET), which makes detailed technical assessments of hunger, predicted a harvest “well below average” in its latest report.

“Unusual livestock deaths continue to be reported,” FEWS NET said. “With smaller herds, few sellable livestock, and almost no income other than charcoal and firewood sales, households are unable to afford adequate quantities of food.”

Ethiopia, Africa’s second most populous nation, borders the Horn of Africa nation of Somalia, where some 855 000 people face need “life-saving assistance”, according to the UN, warning that 2.3 million more people there are “highly vulnerable”.

El Nino comes with a warming in sea surface temperatures in the equatorial Pacific, and can cause unusually heavy rains in some parts of the world and drought elsewhere.

Hardest-hit areas are Ethiopia’s eastern Afar and southern Somali regions, while water supplies are also unusually low in central and eastern Oromo region.

Sensitive issue

Food insecurity is a sensitive issue in Ethiopia, hit by famine in 1984-85 after extreme drought.

Today, Ethiopia’s government would rather its reputation was its near-double-digit economic growth and huge infrastructure investment – making the country one of Africa’s top-performing economies and a magnet for foreign investment.

Still, nearly 20 million Ethiopians live below the $1.25 poverty line set by the World Bank, with the poorest some of the most vulnerable to weather challenges.

Ethiopia’s government has mobilised $33m in emergency aid, but the UN says it needs $237m.

Minster for Information Redwan Hussein told reporters at a recent press conference that Ethiopia is doing what it can.

“The support from donor agencies has not yet arrived in time to let us cope with the increasing number of the needy population,” he said.

http://www.news24.com/Multimedia/Africa/Malnutrition-in-Ethiopian-children-20110916

http://www.news24.com/Africa/News/Millions-hungry-as-Ethiopia-drought-bites-20151002

Related:-

Jiraattonni aanaaAdaamii Tulluu , gargaarsa dhabanii beelaan miidhamaa jiru.

OMN:Oduu Onk. 21,2015 Beelli godinaalee Oromiyaa hedduu miidhaa jiru, gara godina Shawaa bahaa aanaa Adaamii Tulluu Jidduu Kombolachaa jedhamutti, babaldhatee akka jiru himame.

Jiraattonni aanaa kanaa, gargaarsa dhabanii beelaan miidhamaa jiraachuu isaanii dubbatan.

Beelli Oromiyaa godinaalee adda addaa keessatti bara kana namootaa fi loon miidhaa jiru, ammas kan hin dhaabbanne ta’uun himamaa jira.

Haaluma kanaan gara godina Shawaa Bahaa aanaa Adaamii Tulluu Jidduu Kombolchaatti babaldhatee akka jirullee jiraattonni dubbatan.

Jiraataan aanichaa tokko OMN f akka himanitti, rooba dhabameen wal qabatee, hoongee uumameen, namoonni hedduun araddaalee gara garaa keessa jiraatan, beelaaf saaxialamanii jiru.

Bara kana keessa bokkaan si’a lama qofa reebe kan jedhan namni kun, sababa kanaan namoonni midhaan facafachuu qaban, nyaataaf oolfataniiru.

Kan hafe ammoo kafaltii xaa’oo akka baasaniif wayta mootummaan dirqisiiseetti, midhaan facafachuuf qopheeffatan gurguranii baasiif kennanii jiru.

Namoonni hedduun qabeenya harkaa qaban waan fixataniif, beelaaf saaxilamuu danda’aniiru jedhan.

Akka namni kun jedhanitti, namoonni hedduun baadiyaa keessa jiraatan, beela sukaneessaa isaan miidhaa jiru jalaa, qe’ee isaanii dhiisanii gara magaalatti deemaa jiru.

Namoota gara magaalatti deemaa jiran keessaa manguddoonni humna dhabeeyyi ta’anis ni jiru.
Erga magaalaa gahanii booda, lubbuu ufii jiraachisuuf jecha, hujii humnaa olii hojjatanii jiraachuudhaaf dirqamanii jiran.

Hujii humnaa kana hojjachuudhaaf kan dirqaman, lubbuu ufii du’a irraa hambisuuf kan jedhan namni kun, beelli bara kana aanaa isaanii muudatee jiru, haalan yaddessaa ta’uu dubbatan.

Namoota beela kanaan miidhamanii asii fi achi deemaa jiran kana, gama mootummaa biyya bulchaa jiruun, haga ammaatti birmannaan taasifameef tokkollee akka hin jirre namni kun dubbatan.

Namoonnii baay’een daa’imman isaanii waan nyaachisan dhabanii rakkataa jiru. Loon ammoo marga dheedan dhabuun du’aaf saaxilamaniiru jedhan.

Rakkoo kanaan dura muldhatee hin beekne kana, mootummaanis gargaaruu dhiisee caldhisee ilaalaa jira kan jedhan namni kun, sababa kanaaf haalli ammaan kana jiru garmalee yaaddessaadha.

Mootummaan humanan taaytaa qabatee jiru, diinaggeen biyyattii dijiitii lamaan guddatee jira jechuun wayta faarsaa jiru kanatti, lammiileen biyyattii hedduun beelaan saaxilamuu isaanii midiyaalee gara garaa gabaasaa jiraachuun ni yaadatama.

Usmaan Ukkumetu gabaase.

https://www.oromiamedia.org/2015/10/jiraattonni-aanaaadaamii-tulluu-gargaarsa-dhabanii-beelaan-miidhamaa-jiru/

https://www.oromiamedia.org/2015/10/omn-oduu-onk-21-2015/

Why is Ethiopia hungry again?

https://oromianeconomist.wordpress.com/2015/10/20/why-is-ethiopia-hungry-again/

The Cause of Ethiopia’s Recurrent Famine Is Not Drought, It Is Authoritarianism

https://oromianeconomist.wordpress.com/2015/08/27/the-cause-of-ethiopias-recurrent-famine-is-not-drought-it-is-authoritarianism/

Drought, food crisis and Famine in Ethiopia 2015: Children and adults are dying of lack of food, water and malnutrition. Animals are perishing of persisting drought. The worst Affected areas are: Eastern and Southern Oromia, Afar, Ogaden and Southern nations.

https://oromianeconomist.wordpress.com/2015/08/14/drought-food-crisis-and-famine-in-ethiopia-2015-children-and-adults-are-dying-of-lack-of-food-water-and-malnutrition-animals-are-perishing-of-persisting-drought-the-worst-affected-areas-are-e/

The tale of two countries (Obama’s/TPLF’s Ethiopia and Real Ethiopia): The Oromo (Children, Women and elders) are dying of genocidal mass killings and politically caused famine, but Obama has been told only rosy stories and shown rosy pictures.

https://oromianeconomist.wordpress.com/2015/08/02/ethiopia-the-oromo-children-women-and-elders-are-dying-of-genocidal-mass-killings-and-politically-caused-famine-but-obama-has-been-told-only-rosy-stories-and-shown-rosy-pictures-africa-oromia/

What are the 10 most competitive economies in sub-Saharan #Africa? October 8, 2015

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???????????Ethiopia Least competetive GCI 002

What are the 10 most competitive economies in sub-Saharan Africa?

By  Caroline Galvan, World Economic Forum, Sep 30 2015

https://agenda.weforum.org/2015/09/what-are-the-10-most-competitive-economies-in-sub-saharan-africa/?utm_content=buffercdfaa&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

Despite growth averaging more than 5% a year since the turn of the century, sub-Saharan Africa’s economies remain largely noncompetitive: only three of the region’s countries – Mauritius (46th), South Africa (49th) and Rwanda (58th) three – rank in the top half of the 2015-2016 edition of the Global Competitiveness Index, and they occupy 15 of the bottom 20 places.

In general, the region has made progress in efficiency-enhancing market reform, especially in goods market, but has much more to do to improve its institutions, infrastructure, and health and education sectors, all areas in which reforms will take time to reap benefits. With a coming youth bulge – by 2035, more people will be reaching working age in sub-Saharan Africa than in the rest of the world put together – the need to improve education systems is especially urgent.

The recent fall in commodity prices, putting more pressure on many countries in the region, has also accentuated the need to prioritize competitiveness-enhancing reforms.

Mauritius. Although still the top-ranked country in sub-Saharan Africa, Mauritius dropped seven places to 46th (out of 140) in the overall rankings this year – the first fall down the Index after a decade of improvements. This is accounted for important drops in three of the 12 pillars (overall six pillars are losing places) on which the Index is based, labour market efficiency, financial market development and market size. Still, some fundamentals remain strong: Mauritius has the region’s most efficient goods market, best infrastructure and most healthy and educated workforce. To move further up the development ladder it particularly needs to improve the quality of higher education, the rate at which it adopts new technologies and its capacity to nurture innovation.

sub-saharan-african-top-10

South Africa. Moving in the opposite direction to Mauritius, South Africa climbs seven places to 49th. It has improved year-on-year in its uptake of ICTs and established itself as the region’s most innovative economy. South Africa also tops the region for the efficiency of its financial markets, a pillar on which it ranks 12thglobally. It performs reasonably strongly on the pillars of infrastructure and institutions, although corruption and security remain concerns, but needs to make progress on health and education.

Rwanda. Advancing four places for the second year in a row, Rwanda’s overall position of 58th reflects improvements in the financial development pillar – especially regulation of securities exchanges – and business sophistication. It scores 8thglobally for labour market efficiency, thanks in part to the third-highest female labour participation rate in the world, and 17th globally for the strength of its public and private institutions. However, improvements are needed in some fundamental areas of competitiveness including infrastructure, health and higher education.

Botswana. Up three places to 71st, Botswana posts a top-10 score globally for the stability of its macroeconomic environment. It also boasts relatively strong rankings on institutions and labour market efficiency. Despite some improvements in the last year, however, the health and primary education pillar remains its weakest, with the impact of HIV/AIDS and tuberculosis contributing to the second-lowest life expectancy among the 140 economies surveyed.

Namibia. Advancing for the third year in a row, Namibia gains three places to rank 85th in the global Index. It registered year-on-year improvements in nine of the 12 pillars, most notably business sophistication and innovation – albeit from a low base. It improved its score on its strongest pillar, institutions, but slipped back on its weakest, health and primary education; as in Botswana, tuberculosis and HIV/AIDS remain among the biggest concerns.

Cote d’Ivoire. Leaping 24 places in the last year alone to reach 91st in the overall Index, Cote d’Ivoire has now progressed 40 places in the last three years. It has improved year-on-year on every pillar except for the macroeconomic environment, posting its biggest gains in areas such as innovation, financial market development and institutions – all pillars on which it scores in the top half globally. Despite progress also in health and primary education and higher education and training, they remain its weakest area.

Zambia. Although occupying the same position in the Index as last year, 96th, Zambia has noticeably progressed on some pillars while regressing on others. It has improved its score on macroeconomic stability, for example, with progress on the government budget balance – albeit from a low base – and public debt. However, it drops heavily on the pillars of business sophistication, goods market efficiency and financial market development.

Seychelles. Despite being considerably wealthier than the seven countries in the region that rank as more competitive, the Seychelles loses ground for the third year in a row, dropping five places to 97th overall. The country’s competitiveness is held back by a small market size, scoring bottom globally on this pillar. However, it still ranks in the top half globally on seven of the 12 pillars, with its strongest performances coming on infrastructure (2nd best in the region) and labour market efficiency. It also does well on technological readiness (71st, although low performing second in regional comparison).

Kenya. After two years of forward movement in the Index, Kenya slips nine places to 99th with regressions on three pillars in particular: goods market efficiency, financial market development and institutions. Corruption remains the top concern about doing business in the country, according to executives who took part in a survey which forms part of the Index calculations. Despite the decline, financial market development remains one of Kenya’s three strongest pillars, along with innovation and labour market efficiency; its weakest are the macroeconomic environment and, despite a small improvement in the last year, health and primary education.

Gabon. Improving slightly to 103rd overall, Gabon’s main strength is its macroeconomic environment, which is rated among the world’s top 20 thanks to a positive budget balance and low levels of government debt, reflective of its resource-driven economy. However, this is the only pillar on which Gabon ranks in the top half globally, and it ranks among the world’s bottom 20 on four pillars: goods market efficiency, higher education and training, business sophistication and innovation. To diversify its economy, it needs to invest in productivity-enhancing reforms across the board.

https://agenda.weforum.org/2015/09/what-are-the-10-most-competitive-economies-in-sub-saharan-africa/?utm_content=buffercdfaa&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

The Global Competitiveness Report 2015-2016 is available here

Making the rich richer doesn’t necessarily make the rest of us richer September 24, 2015

Posted by OromianEconomist in Economics.
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???????????Trickle down economics

The Political Economy of Development

ha-joon-changHere is an insightful video interview with Cambridge economist Ha-Joon Chang, exploring three ideas from his very readable book ’23 Things They Don’t Tell You About Capitalism’.

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The Real Reason Economic Growth Is Considered Important September 19, 2015

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???????????

All For Israel

Economic growth is not fundamentally important.  For example, perfect egalitarian societies like many hunter-gatherer clans or the Hakka societies occupying the Fujian Tulou could experience zero economic growth and still be absolutely fine as long as they maintain the same standard of living from year to year.

Economic growth becomes far more important for backward societies that function off of hypocritical elitism, oppression, enforced poverty, and some form of forced labour.  These are the qualities of inverse civilization which includes all slave-making civilizations.

Within slave-making societies, the easiest and most convenient position is to be a slave-maker.  As long as you force others to work and keep others constantly oppressed, you get to climb to elite ranks, don’t have to do much work yourself and can get away with it because everybody else is so tired and desperate for any crumb you throw at them that they can’t rebel against you.

Inverse

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Time: Are markets irrationally exuberant? Nobel Prize winning economist Robert Shiller believes they are. September 14, 2015

Posted by OromianEconomist in 10 best Youtube videos, 25 killer Websites that make you cleverer, Economics.
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???????????Trickle down economics

Shiller, a behavioral economist, closely tracks investors’ feelings about the market. He believes that emotions can hold the key to market movements. When I saw Shiller late last week for an interview about his new book on the economics of deception (“Phishing for Phools,” written with Fed Chair Janet Yellen’s husband George Akerlof), he told me more investors are worried that the market is over-valued than at any time since the peak of the dotcom bubble in 2000.

“Interest rates have been at zero” for a long time, says Shiller. “The economy has been viewed as sluggish, and yet [corporate] earnings have been growing and prices have been growing at a rapid pace.” That kind of “irrational exuberance,” says Shiller, is exactly what bubbles are made of.

So, why haven’t we seen a major sell-off, one more lasting than the dip we saw a few weeks back, after which the markets quickly rebounded? Because, says Shiller, investors are caught between two dueling narratives about the market.

First, there’s the “New Normal,” story, which is that we’re in a period of low interest rates that will last a long time, and that’s what’s kept markets up. This creates a sense of unease that our recovery isn’t real, but has somehow been genetically modified by central bankers.

“The aggressive monetary policy, which developed as kind of a new approach to managing [the economy] and was largely international, brought us these very low interest rates,” says Shiller. What’s more, “long rates are low, which represents some kind of public attitude that this [new normal] is going to go on for a long time.” As I have written many times, long periods of easy money always create bubbles. Meanwhile, says Shiller, “there’s another not so commonly-raised factor in connection with understanding the market: concern about inequality, which is rising, and also related to that a concern about information technology replacing jobs.”

Both of those things add to the sense that there is bad news lurking underneath those seemingly strong corporate earnings data of the last several years. That makes investors jittery.

But there’s another narrative. America is still the prettiest house on the ugly block that is the global economy. Where else can people park their money, if not in U.S. blue chips? Shiller adds that the growing sense that bad news may be looming can also “encourage people to accept high prices for houses and the stock market because they need to have something for the future.” Rising markets are supported by investors and consumers whoneed them to rise, because it makes them feel richer. “And they’re not going to say, “Oh, this price is too high, I’m going to consume this,” says Shiller. Rather, they accept the higher and higher asset prices – until they don’t anymore. That’s when the bubble bursts.

Those two dueling narratives may be one reason that markets have been volatile of late. People who hold equities have earned a lot of money — the stock market has gone way up. You could conclude, says Shiller, “I’ve got so much money, let’s go on a cruise! Let’s have a lark.” That sentiment drives consumer spending at the higher level. “But maybe you don’t because you’re worried. You have the sense that [things could change] — or maybe you’re worried about your children,” says Shiller. “In 20 or 30 years, I don’t know what they’re going to be doing. I’m just worried. Or maybe they’ll be doing horribly. So let’s keep that stock.” That in turn buoys markets. It’s a somewhat bipolar cycle that fits with the level of volatility we’ve seen all this year, which is much higher than last.

So what happens now? At some point, the market will receive some important new signal. It could be a rate hike from the Fed this week. Or it could be another raft of bad news from China. At that point, we’ll likely see another sell-off. The question then is whether it becomes a stampede. There’s no metric that will answer that question for sure. Emotions, as much as data, hold the key to what the markets will do. No wonder Shiller won the Nobel for saying as much.

How Emotions Are Affecting the Stock Market

The alienated consciousness, dehumanized human nature and capitalism September 11, 2015

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Economic Sociology and Political Economy

alienation work“The alienated consciousness is correlative with a money economy. Its root is the compulsion to work. This compulsion to work subordinates man to things, producing at the same time confusion in the valuation of things and devaluation of the human body. It reduces the drives of the human being to greed and competition… The desire for money takes the place of all genuinely human needs. Thus the apparent accumulation of wealth is really the impoverishment of human nature, and its appropriate morality is the renunciation of human nature and desires – asceticism. The effect is to substitute an abstraction, Homo Economicus, for the concrete totality of human nature, and thus to dehumanize human nature. In this dehumanized human nature man loses contact with his own body, more specifically with his senses, with sensuality and with the pleasure-principle. And this dehumanized human nature produces an inhuman consciousness, whose only currency…

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Ethiopia: The chronic shortage economy: What is the price and utility of a kilo of Sugar in Finfinnee (Addis Ababa) in terms of never ending queue? August 27, 2015

Posted by OromianEconomist in Economics, Famine in Ethiopia.
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Economic performance and size of government

In the midst of fastest growth hype and official statistical lies,  Ethiopia has been plagued by high rocketed prices for basic goods,  intensive and chronic shortages in all sectors of  economy. This is the situation of  TPLF ( fascist government and monopoly)  controlled economy experiencing declining production (supply deficit)  relative to  citizens demand for basic necessities. In dealing  with bureaucratic corruption that tinkers with distribution,  citizens are experiencing  long queue (disutility) in cities  for basic goods  for which  very limited  supply is  available. They may be approved or disapproved to get access to the purchase  by TPLF local cadres decisions. It has been reported that Ethiopia’s rural areas are in catastrophic famine. Widespread shortages, spiraling inflation and famine  are fueling humanitarian crisis.

This is the Ethiopian capital Addis Ababa (Finfinne) where the population of the early morning standing in long lines under the blazing sun (Sunday August 2015) for the purchase of sugar, oil and other basic goods

This is the Ethiopian capital Addis Ababa (Finfinne) where the population of the early morning standing in long lines under the blazing sun (Sunday August 2015) for the purchase of sugar and oil. Cars, children, women, old and adult, all are in never ending line. Source: http://www.ayyaantuu.net/addis-ababa-this-is-eleven-percent-yearly-growth-in-ethiopia-endless-lines-for-sugar/

Reinventing the current growth model: The need to rework the current economic system to serve all of humanity rather than an elite few August 4, 2015

Posted by OromianEconomist in Economics, Economics: Development Theory and Policy applications, Growth and Inequqlity.
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???????????Trickle down economicsA shocking investigative journey into the way the resource trade wreaks havoc on Africa, ‘The Looting Machine’ explores the dark underbelly of the global economy.

 

 

Although the grievances voiced differed from country to country and from region to region, the belief that the incumbent economic and political system was characterised by inequity and injustice was common to all.

If we are to avoid large-scale societal upheavals in this ultra-connected world, government, business and civil society must come together to rework the current economic system to serve all of humanity rather than just an elite few.

– Fergus Simpson, The Guardian

 

 

Widening inequality gap proof of outdated growth model

We need to rework the current economic system to serve all of humanity rather than an elite few, writes Xyntéo’s Fergus Simpson

 

January saw leading figures from business, government and civil society gather at the World Economic Forum in Davos. A broad spectrum of subjects were debated, including the prospect of a legally binding climate change agreement in Paris this December, Ebola and the nefarious advance of the Islamic State in Mesopotamia. I was particularly encouraged to see one topic keep cropping up – the crisis of burgeoning disparities in wealth.

In a report released in the runup to Davos, Oxfam predicted that within two years the richest 1% of people will have accumulated more wealth than the remaining 99%. The same study found that the wealth of the richest 80 billionaires has continued to increase since 2010, while the wealth of the poorest half has decreased over the same time period. The gap between the haves and the have-nots is growing.

History has taught us that there are moments when people rise up to make a point and say that enough is enough and times must change.

On 25 January 2011, the world witnessed one such moment – pro-democracy protesters occupied Tahrir square in Egypt’s capital, Cairo, demanding self-determination, equality of opportunity and freedom from the shackles of tyranny and oppression. Some 17 long days of demonstrations and civil disobedience followed, bringing the moribund autocracy of longtime Egyptian president Hosni Mubarak to an end.

This event formed part of a much broader social movement that swept across North Africa and the Middle East, toppling sclerotic regimes and corrupt dictators. Before long people in Spain, Greece, the UK and US took to the streets as well. Although the grievances voiced differed from country to country and from region to region, the belief that the incumbent economic and political system was characterised by inequity and injustice was common to all.

And it isn’t just the poor who have been affected – the middle classes have also borne the burden of mushrooming inequalities. Companies have tended to become more productive since the 1970s, but the incomes of middle class workers have remained largely static. Returns from higher productivity have tended to go to owners and investors, not to the workers.

In many ways, inequality has become the defining issue of our time. The popular uprisings that shook the Arab world at the start of this decade were just symptoms of this most elemental of societal ills.

Fortunately, there is no reason to suppose this state of affairs is inevitable.

A promising step forward was announced at Davos, when Ajay Banga, CEO of GLTE partner MasterCard, and Donald Kaberuka, president of the African Development Bank, revealed that they intend to collaborate to foster inclusive growth in Africa.

The MasterCard Labs for Financial Inclusion, funded by an $11m (£7.24m) grant from the Bill and Melinda Gates Foundation, aims to enable more people to access banking services – generating greater equality of opportunity across the world, in developed and developing countries alike. The initiative will soon begin operations in Nairobi, Kenya, and aims to reach over 100 million people globally.

Technological advancements can support the implementation of projects designed to promote inclusive growth, such as the MasterCard Labs for Financial Inclusion. Digital innovations in payment systems and social media, for example, have enabled people to access markets, ideas and information to an extent that is unprecedented in human history.

Indeed, it has been said that the Egyptian revolution started when Whael Ghonim, a marketing executive at Google, saw the bloodied remains of Khaled Mohamed Said – a young man bludgeoned to death by the Egyptian police – pictured on Facebook. Incensed by the injustice that confronted him, Whael created the Facebook page “Kullena Khaled Said” – “We Are All Khaled Said”. Three months later 250,000 people had joined the page. Just one year later the Mubarak regime was no more.

If we are to avoid large-scale societal upheavals in this ultra-connected world, government, business and civil society must come together to rework the current economic system to serve all of humanity rather than just an elite few.

At Xyntéo, we are convinced that the current growth model has become out of date – incapable of meeting the demographic, climate and resource demands of today. Together with our partners, we believe that global business, with its clout, resources and energy, is uniquely placed to overcome this challenge. To us this means reinventing the current growth model so it brings prosperity to much larger numbers of people.

Fergus Simpson is project coordinator at Xyntéo

Read more at source:-

http://www.theguardian.com/sustainable-business/xynteo-partner-zone/2015/feb/04/widening-inequality-gap-proof-of-outdated-growth-model

Why Namibia doesn’t want to be called an upper middle income country July 16, 2015

Posted by OromianEconomist in Africa, Development, Development & Change, Namibia, Theory of Development.
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Statistics: The Sexiest Job of the Decade July 7, 2015

Posted by OromianEconomist in 10 best Youtube videos, 25 killer Websites that make you cleverer, Economics, Uncategorized.
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Discovering Python & R

Anyone who’s got a formal education in economics knows who Hal Varian is. He’s most popularly known for his book Intermediate Economics. He’s also the Chief Economist at Google. He is known to have famously stated more or less, that statisticians and data analysts would be the sexiest jobs of the next decade.

That has come true, to a great extent, and we’ll be seeing more.

Great places to learn more about data science and statistical learning:
1] Statistical Learning (Stanford)
2] The Analytics Edge (MIT)

In a paper called ‘Big Data: New Tricks for Econometrics‘, Varian goes on to say that:

In fact, my standard advice to graduate students these days is “go to the computer science department and take a class in machine learning.” There have been very fruitful collaborations between computer scientists and statisticians in the last decade or so, and I…

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Ethiopia’s Economy: Time for the West to Call a Spade a Spade June 11, 2015

Posted by OromianEconomist in Uncategorized.
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???????????Ethiopia is the one of the lowest in social Progress 2015AUTHORITARIAN OVER SPEECH

From Where I Sit...

Dounle digit EthiopiaThe western media and its sponsors have gone to great lengths to present Ethiopia as a democratic nation whose economy is growing by “double digits”. The suffering Ethiopian people know better but have been muffled and prevented from expressing their aspirations and dreams by a minority mercenary regime. Over the last decade, Ethiopia has been hailed as the “fastest growing non-oil economies” in Africa, maintaining a double-digit annual economic growth rate. Ethiopia’s Gross Domestic Product may have grown (court is still out on that) but according to Simon Kuznets, “the welfare of a nation can scarcely be inferred from a measure of national income.” The measure was never intended as much more than a useful accounting device.

Reports on Ethiopia’s GDP say:

  • “…For the past 10 years, the country has registered an average 10.9 real GDP (Gross Domestic Product) growth rate and this trend has shown us that the country…

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Solar power to the people: Rap-artist Akon smacks that kerosene out of #Africa, with solar academy June 6, 2015

Posted by OromianEconomist in Africa, African Poor, Energy Economics.
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???????????solar energy

“Politics is at the heart of Africa’s energy crisis. The continent’s power utilities are notoriously inefficient. This is partly down to mispricing and underinvestment. But it’s also because utilities are vehicles for political patronage and, in some cases, institutionalised theft.” “The sheer scale of Africa’s energy deficit often fuels a sense of fatalism and paralysis. Yet on the flipside of this crisis are enormous opportunities. Sub-Saharan Africa has some of the world’s most abundant and least exploited renewable energy sources, especially solar power. With the price of solar panels plunging, there are opportunities for firms and governments to connect millions of poor households to affordable small-scale, off-grid systems. This would help the poorest most.” The Guardian, 5 June, 2015.

Rap-artist Akon smacks that kerosene out of Africa, with solar academy

If you haven’t heard any of Akon’s music such as his hit Smack That, you may missed the pun in the headline, and you may have also done yourself a service (depending on your music taste). However, it is outside of music that Akon is really helping humanity. Having already set up his Lighting Africa initiative, Akon, 42, is now setting up a solar academy in Mali, and will enlist the assistance of European solar technicians and experts to supply training programs, equipment and guidance. Solektra International is to partner on the project. The solar academy will teach students how to install and maintain solar powered electricity systems and microgrids. “We have the sun and innovative technologies to bring electricity to homes and communities,” said Akon Lighting Africa co-founder Samba Baithily. “We now need to consolidate African expertise.” “We expect the Africans who graduate from this center to devise new, innovative, technical solutions,” added Niang. “With this academy, we can capitalize on Akon Lighting Africa and go further.” Akon’s Lighting Africa scheme is present in 14 African countries and continues to expand in an effort to help subsidise the cost of installing solar on households who want to switch from the polluting kerosine lamps (which are currently used by almost 250 million people in Africa without electricity), to solar energy. Read more at: http://reneweconomy.com.au/2015/rap-artist-akon-smacks-that-kerosene-out-of-africa-with-solar-academy-85077

Solar power to the people: how the sun can ease Africa’s electricity crisis

, The Guardian,  5 June 2015

    The scale of the continent’s energy deficit often fuels a sense of fatalism and paralysis. Yet on the flipside of this crisis are enormous opportunities
Solar power in Guinea-Bissau
A solar panel on a roof in Guinea-Bissau. Sub-Saharan Africa has some of the world’s most abundant and least exploited renewable energy sources, especially solar power. Photograph: WestEnd61/Rex
“We shall make electric light so cheap that only the wealthy can afford to burn candles,” said Thomas Edison, inventor of the modern lightbulb. That was almost a century and a half ago. Today in Africa, 621 million people – two-thirds of the population – live without electricity. And the numbers are rising. A kettle boiled twice a day in the UK uses five times as much electricity as someone in Mali uses in a year. Nigeria is one of the world’s biggest oil exporters but 93 million residents depend on firewood and charcoal for heat and light. On current trends, there is no chance Africa will hit the global target of energy for all by 2030.

Sudanese refugees stand around solar stoves during a training session in Iridimi camp, north-eastern Chad
Sudanese refugees stand around solar stoves during a training session in Iridimi camp, north-eastern Chad. Photograph: Corbis

Unlike droughts, health epidemics and illiteracy, Africa’s energy crisis seldom makes the headlines. Yet the social, economic and human costs are devastating. Inadequate and unreliable electricity undermines investment. Power shortages cut economic growth by 2-4% annually. The toxic fumes released by burning firewood and dung kill 600,000 people a year – half of them children. Health clinics are unable to refrigerate life-saving vaccines and children are denied the light they need to study. Politics is at the heart of Africa’s energy crisis. The continent’s power utilities are notoriously inefficient. This is partly down to mispricing and underinvestment. But it’s also because utilities are vehicles for political patronage and, in some cases, institutionalised theft. Some $120m went missing from the Tanzanian state power utility last year through a complex web of offshore companies. The sheer scale of Africa’s energy deficit often fuels a sense of fatalism and paralysis. Yet on the flipside of this crisis are enormous opportunities. Sub-Saharan Africa has some of the world’s most abundant and least exploited renewable energy sources, especially solar power. With the price of solar panels plunging, there are opportunities for firms and governments to connect millions of poor households to affordable small-scale, off-grid systems.

This would help the poorest most. The latest Africa Progress Panel report, published this week, estimates that 138 million households living on less than $2.50 a day spend $10bn annually on energy-related products, including charcoal, candles and kerosene. Measured on a per-unit cost basis, these poor households pay 60-80 times more for energy than people living in London or Manhattan. Off-grid solar power could slash these costs, releasing resources for productive investment, health and education, driving down poverty and raising life expectancy. If you think this is a pipedream, think again. Bangladesh has installed more than 3.5m off-grid solar power systems, and the figure is set to double over the next few years. The key to success? Financial and technical support from government, allied to new business models. In Africa, a vibrant off-grid solar industry is poised for takeoff. The only thing missing in most countries is government action to support, encourage and enable this investment. Supporting the development of large-scale renewable energy is not just the right thing to do for Africa. It is also the smart thing to do on climate change. One of the symptoms of Africa’s energy poverty is the destruction of forests to produce charcoal for rising urban populations: fewer trees means the loss of vital carbon sinks.

Small-scale solar energy can provide millions of people with a first step on the energy ladder. But it cannot in the medium term fill the energy void left by large-scale utilities. African governments must aim for an annual growth rate in power generation of 10% a year for the next two decades – about five times current levels. Countries such as Ethiopia, Kenya and Rwanda have demonstrated this is possible. Both have simultaneously increased public investment while attracting large-scale foreign investment. Aid donors can help by providing bridging loans and helping to reduce risk.

Throughout history electricity has fuelled the growth that has created jobs, cut poverty, and improved the quality of life. Now, almost 150 years after Edison developed the lightbulb, it is time to spark an African energy revolution. We lack neither the finance nor the technologies to do so: all that’s needed is the vital connection of international cooperation and political will.

  • Kevin Watkins, director of the Overseas Development Institute, is lead author of the 2015 Africa Progress Panel report, Power, People, Planet.

Read more at:- http://www.theguardian.com/business/economics-blog/2015/jun/05/solar-power-africa-sun-electricity-crisis

ETHIOPIA: AUTHORITARIAN OVER SPEECH AND THE ASCENDANCE OF “DEVELOPMENT FETISHISM” May 28, 2015

Posted by OromianEconomist in Africa, Free development vs authoritarian model.
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???????????AUTHORITARIAN OVER SPEECH

THE ASCENDANCE OF “DEVELOPMENT FETISHISM”

In its literal definition, the term development is generally understood to mean an intentionally conceived course of action that aims to realize the full potential of a given population. Though previously the notion of planned development was largely confined to communist countries, it now seems to have drawn some attention across the board.

Probably, the reason why the word has attracted attentions outside the communist block was partly due to the phenomenal success registered with US Marshal Plan and “Reverse Course” program to rehabilitate the war-torn Europe and Japan respectively in the aftermath of World War II.

Later on, several attempts have been made to replicate the success of the aforementioned planned development interventions in most developing countries after they won their political independence. Nevertheless, unlike the European and Japanese case, an all-out success with planned development in many of the developing countries, with the exception of a handful of Asian and Latin American countries, had remained until very recently quite a distant dream.

To the contrary, the net outcome of long years of planned development interventions in many of these countries for the most part ended in creating unbridgeable income gap between the rich and the poor, pervasive poverty, environmental degradation, chronic political dictatorship, civil wars, insecurity and instability.

The ever changing economic models and strategies which these countries have opted to on various occasions such as economic growth approach, centrally planned socialist economy, growth and transformation plan, structural-adjustment program, poverty alleviation program, participatory development and all that could well be symptomatic of the crisis of planned development in the past decades.

Of course, in speaking the adoption of a development model, it is worth noticing that there may be several internal and external factors that directly or indirectly impact the choice made by a given country. The competing major international ideological orientations, the fashionable development discourses, the leverage and influence of hegemonic powers, the influence of global financial and economic institutions, bilateral and multilateral diplomatic relationships between and among countries and the political and ideological orientations of the powers that be are to mention but a few.

Be that as it may, in this article I would like to argue about Ethiopia’s adoption of the ‘developmental state’ ideology that can largely be attributed to the incumbent’s political interest to mend legitimacy crisis and carry on with its repressive rule. And for this to happen it has apparently resorted to different political strategies as briefly discussed below.

Mystifying development

One of the biggest lessons learned from the failure of the first ever attempted ‘economic growth’ model that sought only to enhance the national economic wealth of the nation – GDP – was that a true and sustainable development must give due attention to all-round development which includes, among others, the economic, social, moral, intellectual and spiritual needs and demands of the larger population.

Subsequently, this has led to the new concept of an inclusive, participatory and human-centered development that has found wide currency since the 1980s. Such concepts of development also compel the need to make citizens active and conscious actors in a development process that ultimately determines their destiny.

Contrary to this, what is now transpiring in Ethiopia largely looks a full-blown psychological campaign to instill false-consciousness among the people by elevating the notion of development to a mystique and idol stature. The intention behind this clearly lies in making people unconscious and unquestioning actors who would readily submit to everything that comes in the name of development.

Consider the unrelenting media propaganda which scarcely misses mentioning development in the course of the day. Now, each and every government initiation comes wrapped with the tag of development. While a view or an action that aligns with the government would soon receive the honorific title of ‘developmental’, in contrast, any dissenting view or action would quickly be admonished as ‘anti-development’. In short, observing how the term development is used today in Ethiopia, probably one gets the impression that it might have acquired a new meaning which approximates something ‘sacred’.

Just imagine for a moment what a message of a sticker commonly put on the door of a soon-to-be-demolished shop that reads, “Sealed for Development Purpose” implicitly implies. In this connection, it is also worth to recall the occasion some years back when the top religious leaders had appeared on the public media to ‘consecrate’ the “Great Renaissance Dam” whereby they pronounced any non-consenting gesture towards the construction of the dam to be viewed as a kind of blasphemy that deserves some sort of admonition.

When people attempt to make the things that they themselves have created an object of worship, in the Marxist economic discourse, it is often said to be a form of fetishism. Thus, the unrelenting effort that the Ethiopian government has been waging supposedly to mystify and idolize the notion of development could be none other than “development fetishism”.

Development as a pretext

One major reason for instilling the attitude of “development fetishism” among the people seems to lie in the government’s ambition of attaching itself with a rather eye-catching infrastructural and building construction activities now underway in the country irrespective of its effect on the living realities of the ordinary mass and thereby portray itself as an indispensable actor without which Ethiopia’s development would be impossible to think of.

In this regard, it’s worth looking back at the circumstances that led the government to proclaim the status of ‘developmental state’ some few years back. Apparently, the government switched to the idea of ‘developmental state’ following the infamous 2005 election when it lost its credibility with the larger public. Furthermore, it was followed by the time when it kept itself busy with issuing some draconian laws. From this it follows that the declaration of ‘developmental state’ was but a tacit act of openly installing an authoritarian system.

After all, the notion of ‘developmental state’ is often associated either with those Asian countries with a communist political system or naked authoritarian regimes that have clung to power for so long, except Japan.

Evidently, all the messages and actions that now emanate from the ruling party in connection with the upcoming election also well signify how the ruling part is determined to use development as an excuse to cling to power indefinitely without any serious contender. Ironically, all this is not only against the unrelenting rhetoric of democracy and freedom but also in flagrant contradiction to the spirit of the constitution that itself has given birth to.

Fought for the sake of development or justice?

While proclaiming the status of developmental state which is in many ways repressive, the present day rulers seem to have forgotten why in the first place they had fought a bitter war against the former repressive regime, the Dergue. Surely, it was not so much for the sake of primarily economic development as it was for social justice.

As a matter of fact, development – especially that of material and physical – is just one among many other important duties and functions that a just government is required to carry out. This is not to say, however, for poor countries like ours the issue of development is not an imperative one. Yet, to promote development at the expense of justice, the rule of law, freedom and democratic rights, which in fact are crucial for sustainable development, presumably by virtue of being a ‘developmental state’ is very much unbecoming of such a sort of government.
Above all, the essence of a truly democratic government lies in its commitment to advance the freedom and democratic right as well as the welfare and security of its citizens. Indeed, the prime difference between authoritarian and democratic government rests on the fact that in the latter such great questions as development that evidently bears great stake in the life of people are to be decided not by whims and illusions of an individual or a group of tyrannical rulers but by well-informed, rational needs and demands of the larger citizens. Certainly, no thoughtful and rational government would attempt to reduce citizens to be blind worshipers of an idol that is created for political purpose. As the eminent classical sociologist Emile Durkheim had put it, “A healthy political system requires good faith and the avoidance of force and fraud. It requires, in a word, justice.”
Ed’s Note: The writer can be reached at tayesosa@yahoo.com

Ethiopia among the 10 poorest performers in the World Economic Forum Report for Human Capital May 18, 2015

Posted by OromianEconomist in Africa, Developed country, Development & Change, Economics, Ethiopia the least competitive in the Global Competitiveness Index.
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???????????Ethiopia is the one of the lowest in social Progress 2015

Ethiopia Ranks 115 out of 124 countries in Human Capital Index 2015 Rank

Ethiopia  ranks at 115 out of 124 countries in the ‘Human Capital Index’ because of its poor performance on educational outcomes, says the Human Capital Report 2015 issued by the World Economic Forum (WEF).

The index is dominated by European countries with two countries from the Asia and Pacific region and one from the North America region also making it into the top 10.

Finland topped the ranking of the Human Capital Index in 2015, scoring 86% of its human capital, followed by Norway, Switzerland, Canada and Japan.

Sweden, Denmark, the Netherlands, New Zealand and Belgium also seized the places in the top 10 list. Ethiopia scored 50.25 out of 100.

The leaders of the index are high-income economies that have placed importance on high educational attainment and a correspondingly large share of high-skilled employment.

The World Economic Forum (WEF) released the Human Capital Report 2015 in Geneva, Switzerland on Thursday 14 May 2015.

The WEF prepared the report in collaboration with Mercer, an American global human resource and related financial services consulting firm.

The report elaborates the status of different countries across the world on the Human Capital Index and provides key inputs for policy makers to augment capacities of human capital in 124 countries it has surveyed.

In the index, WEF highlighted Ethiopia’s scarcity of skilled employees, poor ability to nurture talent through educating, training and employing its people.

“Talent, not capital, will be the key factor linking innovation, competitiveness and growth in the 21st century,” said WEF Executive Chairman Klaus Schwab releasing the report at a news conference in Cologny, near Geneva, Switzerland.

In sub-Saharan Africa, Mauritius (72) holds the highest position in the region. While another six countries rank between 80 and 100, another 17 countries from Africa rank below 100 in the index. South Africa is in 92nd place and Kenya at 101. The region’s most populous country, Nigeria (120) is among the bottom three in the region, while the second most populous country, Ethiopia, is in 115th place. With the exception of the top-ranked country, the region is characterized by chronically low investment in education and learning.

Human Capital Index 2015 regional Ranks

Except Yemen (40.7) all the 10 poorest performers are African Countries: Ethiopia (50.25),  Burkina Faso (49.22),  Ivory Coast ( 49.02),  Mali (48.51), Guinea (48.25),  Nigeria (48.43),  Burundi (46.76),  Mauritania (42.29) and  Chad (41.1).

The countries are ranked on the basis of 46 indicators that track “how well countries are developing and deploying their human capital focusing on education, skills and employment”.

 The index takes a life-course approach to human capital, evaluating the levels of education, skills and employment available to people in five distinct age groups, starting from under 15 years to over 65 years. The aim is to assess the outcome of past and present investments in human capital and offer insight into what a country’s talent base will look like in the future.

http://reports.weforum.org/human-capital-report-2015/press-releases/

If Ethiopia’s economy is so vibrant, why are young people leaving? April 28, 2015

Posted by OromianEconomist in Africa, Africa Rising, Ethiopia the least competitive in the Global Competitiveness Index, Ethiopia's Colonizing Structure and the Development Problems of People of Oromia, The 2014 Ibrahim Index of African Governance, The extents and dimensions of poverty in Ethiopia, The State of Food Insecurity in Ethiopia, The Tyranny of TPLF Ethiopia.
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OjimmaEthiopia is the one of the lowest in social Progress 2015

If Ethiopia is so vibrant, why are young people leaving?

Al Jazeera

April 28, 2015

Within a week, Ethiopians were hit with a quadruple whammy. On April 19, the Libyan branch of the Islamic State in Iraq and the Levant (ISIL) released a shocking video purporting to show the killings and beheadings of Ethiopian Christians attempting to cross to Europe through Libya. This came only days after an anti-immigrant mob in South Africa killed at least three Ethiopian immigrants and wounded many others. Al Jazeera America reported that thousands of Ethiopian nationals were stranded in war-torn Yemen. And in the town of Robe in Oromia and its surroundings alone, scores of people were reportedly grieving over the loss of family members at sea aboard a fateful Europe-bound boat that sank April 19 off the coast of Libya with close to 900 aboard.

These tragedies may have temporarily united Ethiopians of all faiths and ethnic backgrounds. But they have also raised questions about what kind of desperation drove these migrants to leave their country and risk journeys through sun-scorched deserts and via chancy boats.

The crisis comes at a time when Ethiopia’s economic transformation in the last decade is being hailed as nothing short of a miracle, with some comparing it to the feat achieved by the Asian “tigers” in the 1970s. Why would thousands of young men and women flee their country, whose economy is the fastest growing in Africa andwhose democracy is supposedly blossoming? And when will the exodus end?

After the spate of sad news, government spokesman Redwan Hussein said the tragedy “will be a warning to people who wish to risk and travel to Europe through the dangerous route.” Warned or not, many youths simply do not see their dreams for a better life realized in Ethiopia. Observers cite massive poverty, rising costs of living, fast-climbing youth unemployment, lack of economic opportunities for the less politically connected, the economy’s overreliance on the service sector and the requirement of party membership as a condition for employment as the drivers behind the exodus.

A 2012 study by the London-based International Growth Center noted (PDF) widespread urban unemployment amid growing youth landlessness and insignificant job creation in rural areas. “There have been significant increases in educational attainment. However, there has not been as much job creation to provide employment opportunities to the newly educated job seekers,” the report said.

One of the few ISIL victims identified thus far was expelled from Saudi Arabia in 2013. (Saudi deported more than 100,000 Ethiopian domestic workers during a visa crackdown.) A friend, who worked as a technician for the state-run Ethiopian Electricity Agency, joined him on this fateful trek to Libya. At least a handful of the victims who have been identified thus far were said to be college graduates.

Given the depth of poverty, Ethiopia’s much-celebrated economic growth is nowhere close to accommodating the country’s young and expanding population, one of the largest youth cohorts in Africa. Government remainsthe main employer in Ethiopia after agriculture and commerce. However, as Human Rights Watch noted in 2011, “access to seeds, fertilizers, tools and loans … public sector jobs, educational opportunities and even food assistance” is often contingent on support for the ruling party.

Still, unemployment and lack of economic opportunities are not the only reasons for the excessive outward migration. These conditions are compounded by the fact that youths, ever more censored and denied access to the Internet and alternative sources of information, simply do not trust the government enough to heed Hussein’s warnings. Furthermore, the vast majority of Ethiopian migrants are political refugees fleeing persecution. There are nearly 7,000 registered Ethiopian refugees in Yemen, Kenya has more than 20,000, and Egypt and Somalia have nearly 3,000 each, according to the United Nations refugee agency.

As long as Ethiopia focuses on security, the door is left wide open for further exodus and potential social unrest from an increasingly despondent populace.

Ethiopians will head to the polls in a few weeks. Typically, elections are occasions to make important choices and vent anger at the incumbent. But on May 24, Ethiopians will be able to do neither. In the last decade, authorities have systematically closed the political space through a series of anti-terrorism, press and civil society laws. Ethiopia’s ruling party, now in power for close to 24 years, won the last four elections. The government has systematically weakened the opposition and does not tolerate any form of dissent.

The heightened crackdown on freedom of expression has earned Ethiopia the distinction of being the world’sfourth-most-censored country and the second leading jailer of journalists in Africa, behind only its archrival, Eritrea, according to the Committee to Protect Journalists.

There is little hope that the 2015 elections would be fundamentally different from the 2010 polls, in which the ruling party won all but two of the 547 seats in the rubber-stamp national parliament. The ruling party maintains a monopoly over the media. Authorities have shown little interest in opening up the political space for a more robust electoral contest. This was exemplified by the exclusion of key opposition parties from the race, continuing repression of those running and Leenco Lata’s recent failed attempt to return home to pursue peaceful political struggle after two decades of exile. (Lata is the founder of the outlawed Oromo Liberation Front, fighting since 1973 for the rights of the Oromo, Ethiopia’s marginalized majority population, and the president of the Oromo Democratic Front.)

A few faces from the fragmented and embittered opposition maybe elected to parliament in next month’s lackluster elections. But far from healing Ethiopia’s gashing wounds, the vote is likely to ratchet up tensions. In fact, a sea of youth, many too young to vote, breaking police barriers to join opposition rallies bespeaks not of a country ready for elections but one ripe for a revolution with unpredictable consequences.

Despite these mounting challenges, Ethiopia’s relative stability — compared with its deeply troubled neighbors Somalia, South Sudan, Eritrea and Djibouti — is beyond contention. Even looking further afield, across the Red Sea, where Yemen is unraveling, one finds few examples of relative stability. This dynamic and Ethiopia’s role in the “war on terrorism” explains Washington’s and other donors’ failure to push Ethiopia toward political liberalization.

However, Ethiopia’s modicum of stability is illusory and bought at a hefty price: erosion of political freedoms, gross human rights violations and ever-growing discontent. This bodes ill for a country split by religious, ethnic and political cleavages. While at loggerheads with each other, Ethiopia’s two largest ethnic groups — the Oromo (40 percent) and the Amhara (30 percent) — are increasingly incensed by continuing domination by Tigreans (6 percent).

Ethiopian Muslims (a third of the country’s population of 94 million) have been staging protests throughout the country since 2011. Christian-Muslim relations, historically cordial, are being tested by religious-inspired violence and religious revivalism around the world. Ethiopia faces rising pressures to choose among three paths fraught with risks: the distasteful status quo; increased devolution of power, which risks balkanization; and more centralization, which promises even further resistance and turmoil.

It is unlikely that the soul searching from recent tragedies will prompt the authorities to make a course adjustment. If the country’s history of missed opportunities for all-inclusive political and economic transformation is any guide, Ethiopians might be in for a spate of more sad news. As long as the answer to these questions focuses on security, the door is left wide open for further exodus and potential social unrest from an increasingly despondent populace.

*Hassen Hussein is an assistant professor at St. Mary’s University of Minnesota.

http://america.aljazeera.com/opinions/2015/4/if-ethiopia-is-so-vibrant-why-are-young-people-leaving.html

THE DEPTHS OF ETHIOPIA’S CORRUPTION. #Africa March 11, 2015

Posted by OromianEconomist in Colonizing Structure, Corruption, Corruption in Africa, Illicit financial outflows from Ethiopia.
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According to the World Bank, companies held by business group the Endowment Fund for the Rehabilitation of Tigray (EFFORT) account for roughly half of the country’s modern economy. The group is closely allied with the ruling Ethiopian People’s Revolutionary Democratic Front (EPDRF), an alliance of four parties.

EFFORT is a conglomerate formed from assets collected in 1991 by the EPRDF to rehabilitate the Tigray region in northern Ethiopia after it had been decimated by poverty and conflict. The Tigray People’s Liberation Front (TPLF) is the lead party in the EPDRF coalition.

Tigrayans, however, only account for eight percent of the country’s 90 million people. According to Abebe Gellaw, an exiled Ethiopian journalist and founder of Addis Voice, a web platform that provides news that is otherwise censored by the Ethiopian government, EFFORT has become a business racket for the Tigrayan elite who are monopolising major sources of the country’s wealth.

“The TPLF controls key government institutions and a significant portion of the economy. For over 15 years, EFFORT has been used by the TPLF to channel public resources and funds to the coffers of the TPLF through illegal deals, contracts, tax evasion, kick-backs and all sorts of illegal operations,” he told IPS.

Azeb Mesfin, Zenawi’s widow, currently manages the multi-billion-dollar business empire.

She claims her husband paid himself a modest salary of 250 dollars a month, yet the online website “the Richest.org”, which publishes the net worth of the richest people in the world, recently divulged that Meles was in fact one of Africa’s wealthiest leaders having amassed a personal fortune of three billion dollars.

http://www.africacradle.com/2015/03/11/the-depths-of-ethiopias-corruption/

The TPLF Corruption network

THE DEPTHS OF ETHIOPIA’S CORRUPTION

(Africa cradle, Finfinnee/London) – Ethiopia may be one of the fastest-growing, non-oil producing economies in Africa in recent years, but corruption in this Horn of Africa nation is a deterrent to foreign investors looking for stable long-term partnerships in developing countries.

“Bankers, miners and developers presenting projects to investment committees in countries that fare badly in corruption rankings frequently struggle to get investment. Corruption raises red flags because it makes local markets uncompetitive, unpredictable and therefore largely hostile to these long-term players,” Ed Hobey, the East Africa analyst at the political risk firm Africa Risk Consulting, told us.

On May 11, in the biggest crackdown on corruption in Ethiopia in the last 10 years, authorities arrested more than 50 high profile people including government officials, businessmen and a minister.

Melaku Fanta, the director general of the Revenue and Customs Authority, which is the equivalent rank of a minister, his deputy, Gebrewahid Woldegiorgis, and other officials were apprehended on suspicion of tax evasion.

But the arrests have raised questions about the endemic corruption at the heart of the country’s political elite.

Berhanu Assefa of the Federal Ethics and Anti-corruption Commission of Ethiopia told us that these arrests highlighted how corruption has insinuated itself into the higher levels of officialdom.

“Corruption is a serious problem we are facing. We now see that corruption is occurring in higher places than we had previously expected. Areas vulnerable to corruption are land administration, tax and revenue, the justice system, telecommunications, land procurement, licensing areas and the finance sector,” he said.

Ethiopia ranks 113 out of 176 countries on the Corruption Perceptions Index of Transparency International, a global civil society coalition that encourages accountability. The country has also lost close to 12 billion dollars since 2000 to illicit financial outflows, according to Global Financial Integrity (GFI), whose statistics are based on official data provided by the Ethiopian government, the World Bank, and the International Monetary Fund (IMF).

Dr. Getachew Begashaw, a professor of economics at Harper College in the United States, told IPS that there was a fear that the recent high profile arrests were merely political theatre designed to placate major donors such as the World Bank and the IMF, and to give credibility to the new regime’s fight against corruption. Prime Minister Hailemariam Desalegn took over leadership of the country after Prime Minister Meles Zenawi died in August 2012.

“They are using this as a PR stunt to appease not only the donors, but to also dupe the Ethiopian people. Because many non-party affiliated Ethiopians in the business community are complaining, and this complaint is trickling down to the average people on the streets,” he told IPS.

According to the World Bank, companies held by business group the Endowment Fund for the Rehabilitation of Tigray (EFFORT) account for roughly half of the country’s modern economy. The group is closely allied with the ruling Ethiopian People’s Revolutionary Democratic Front (EPDRF), an alliance of four parties.

EFFORT is a conglomerate formed from assets collected in 1991 by the EPRDF to rehabilitate the Tigray region in northern Ethiopia after it had been decimated by poverty and conflict. The Tigray People’s Liberation Front (TPLF) is the lead party in the EPDRF coalition.

Tigrayans, however, only account for eight percent of the country’s 90 million people. According to Abebe Gellaw, an exiled Ethiopian journalist and founder of Addis Voice, a web platform that provides news that is otherwise censored by the Ethiopian government, EFFORT has become a business racket for the Tigrayan elite who are monopolising major sources of the country’s wealth.

“The TPLF controls key government institutions and a significant portion of the economy. For over 15 years, EFFORT has been used by the TPLF to channel public resources and funds to the coffers of the TPLF through illegal deals, contracts, tax evasion, kick-backs and all sorts of illegal operations,” he told IPS.

Azeb Mesfin, Zenawi’s widow, currently manages the multi-billion-dollar business empire.

She claims her husband paid himself a modest salary of 250 dollars a month, yet the online website “the Richest.org”, which publishes the net worth of the richest people in the world, recently divulged that Meles was in fact one of Africa’s wealthiest leaders having amassed a personal fortune of three billion dollars. This has led many to question the provenance of the erstwhile leader’s wealth – when he had no known business engagements.

Illicit financial flows as a result of corruption are a major hindrance to a country’s development, undermining institutions, economies and societies. According to the Africa Progress Panel’s Africa Progress Report 2013, the continent is losing more through illicit financial outflows than it receives in aid and foreign direct investment.

A commitment to greater accountability and transparency to curtail illicit financial flows should occur on both the national and international levels, according to E. J. Fagan, deputy communications director at GFI.

“Reforms and policies are needed to strengthen customs enforcement and make governing apparatuses more transparent. The international community can create a multilateral system of automatic exchange of tax information that African countries like Ethiopia can access, so as to make it difficult for illicit actors to hide money and transfer large amounts of illicit money without detection,” he told IPS.

Begashaw added that corruption in the social sphere also breeds social inequality, disenfranchisement and a breakdown in national unity and civil society.

“The very existence of parastatals and TPLF-affiliated endowed business conglomerates like EFFORT is a major source of corruption. The Birr (Ethiopian currency) will depreciate and inflation will skyrocket. The capacity of the state to provide public goods and services will decline. Free market competition will be eroded. Government revenue will be reduced and the budget deficit will rise.

“If they are really serious about combating corruption, they should start doing so from the top,” he said.