Keywords

The twenty-first century has seen increased optimism about the prospects for African economic development, and the oft-cited The Economist cover of 2000 depicting Africa as a “hopeless continent” has long seemed obsolete. Ethiopia, with its average annual GDP per capita growth of over 6% since the turn of the millennium (IMF, 2020), is at the forefront of the current wave of optimism. The country’s rapid growth has been achieved under a policy focus on the agricultural sector—another aspect of development that has seen a renewed wave of optimism in the twenty-first century. After two decades of neglect in the 1980s and 1990s, the role of the agricultural sector in economic development has again risen to the top of the development agenda for many scholars, policymakers, and donors. This background forms the starting point of this book, which studies Ethiopia’s rapid—but so far relatively short—growth during the implementation of the macro-level development policy “agricultural development-led industrialization” (ADLI), first established in the early 1990s. The research uses the Ethiopian experience as a case to study the role of the agricultural sector in economic growth in low-income countries.

Based on its research the book makes two main arguments: first, that the agricultural sector remains an important engine of growth in low-income countries; and second, that there is scope for states in contemporary low-income countries to take a leading role in the transformation of the agricultural sector on the path toward long-term economic growth. These arguments synthesize the research which is presented in three main parts in the book. The book’s first part discusses the role of agriculture in economic development from a theoretical perspective, as well as the role that can be played by the state to foster agricultural development and the recent development experience in sub-Saharan Africa (SSA). The second part of the book elaborates on the context of the case study, in terms of the economic, political, and agricultural context of Ethiopia. The third and last part covers the book’s empirical investigation. Based on a method of Semi-Input-Output multiplier analysis (SIO), the book estimates the Ethiopian agricultural sector’s contribution to aggregate growth through its linkages with other sectors. This analysis reveals that agricultural growth has been central to the aggregate growth given Ethiopia’s economic structure, validating the central hypothesis derived from the first part of the book on the important role that agriculture can play in economic development.

Aim and Contribution

This research aims to use Ethiopia’s recent experience of rapid growth as a case to explore whether agricultural-led growth is happening in a country in SSA today and to understand if this can be a path toward long-term economic growth. Agricultural-led growth is understood as a process in which agricultural growth due to increased agricultural productivity (which, in turn, stems from increased public investment combined with technological advancements) stimulates aggregate growth. In this process, agricultural growth both generates a surplus to fuel the aggregate economy and increases farmers’ incomes, generating demand for locally produced products. This understanding of the link between agricultural growth and economic growth draws explicitly on Adelman’s (1984) definition of “agricultural demand-led growth” (ADLI) and generally on the broader agriculture-for-development perspective, as outlined in the World Development Report 2008 (World Bank, 2007). Implicitly, the research also aims to generate insights that can be used to draw lessons for other contemporary low-income countries in SSA, although any such lessons must be drawn with caution and consideration for each country’s specific context.

With these aims in mind, the book’s main topics of interest are the role of the agricultural sector in economic growth in today’s low-income countries, as well as the role of the state in both agricultural and economic growth. These topics are explored through theoretical discussions and through an empirical case study of Ethiopia’s agricultural and economic growth, mainly from the 1990s onward. The case study focuses on Ethiopia’s recent economic history during a time of significant economic change and attempts to do so in the context of longer trajectories in the history of the Ethiopian economy.

This work contributes to the previous literature by lending support to the large body of work arguing that the agricultural sector is important for initial economic growth in low-income countries. It adds to the existing literature by specifically focusing on one relevant case. Given its rapid economic growth, achieved under a policy focus on agriculture, large size, and political importance, the case of Ethiopia is an important contribution to the debate.

Case Study Approach

The book adopts a case study approach primarily based on national-level data. As discussed by Alston (2008), macro-level case studies can be useful inroads toward developing an understanding of both the determinants and consequences of economic change. The country-specific approach is justified by the difficulty of generating insightful results through multi-country or continent-wide approaches, which are limited by the diversity among nations. All countries pursuing economic development have a unique point of departure in terms of physical endowments, social and political settings, and historical context. Moreover, development outcomes often vary even among countries that share some of these characteristics (Nayyar, 2018). The macro-level, national approach is most appropriate for the sectoral-level interest in the role of the agricultural sector in economic change. In addition, the data that is needed for this question is mostly available at the national level. Finally, both agricultural and economic growth are affected by institutional and economic policies, which are determined at the national level (Lains & Pinilla, 2009).

The case study of Ethiopia is not intended to be interpreted as a representative case for the broader SSA experience. Instead, it is intended to be a careful, country-specific study that considers Ethiopia’s specific conditions to shed light on its particular development outcomes. Ethiopia is studied for its own sake, neither as a representative nor as an outlier. On the one hand, Ethiopia has some high-level similarities with other countries in SSA; the country is poor, largely rural, has experienced economic and agricultural growth, and has undergone a slow structural transformation toward manufacturing since the turn of the millennium. On the other hand, there are also differences, such as Ethiopia’s large population, relative population density in certain areas, different historical experiences of colonization, and long history of state formation. Neither the unifying nor the distinguishing traits are strong enough for Ethiopia to be seen as either representative of or distinct from the SSA experience. Instead, Ethiopia is chosen because its experience of agricultural and economic growth coinciding with a policy focus on the agricultural sector makes it a suitable case for the main research interest: the role of the agricultural sector in economic growth in a contemporary low-income country.