Prime Minister Dr. Abiy Ahmed has paid a weeklong visit to some of Asian economies which picked up miracles growth rates and underwent astronomical industrialization in span of few years. And, economists embolden Ethiopia to follow the suits of South Korea and Japan particularly in pushing for export-oriented industries to transform its growing economy yet facing various challenges.
Countries like South Korea and Japan went through rosier period of economic growth mainly ascribable to export-oriented policies, trained manpower and advanced infrastructure. However, despite the takeoffs, the economics also faced high external debt and other challenges which nowadays risk Ethiopia’s growing economy.
Notable for their rapid economic transformation, Abiy stopped in People’s Republic of Korea and headed for Tokyo International Conference on African Development (TICAD) Summit held in Japan. In addition to meeting leaders of the countries, Abiy met with leaders of giant multinational companies such as Samsung and Toshiba Corporation other huge industries which Ethiopia desperately needs.
For long, Ethiopia particularly former leaderships have openly benchmarked South Asian countries as their economic models. And also Abiy sees greater economic opportunities in the Asian countries where he encourages giant companies to invest in Ethiopia.
Efficient cadres and technocrats and institutions are the keys behind the economic miracles in South Korea and Japan. It was the Japanese ministries industry along other institutes that has played the leading role in its developmental state model, says Dr. Eyob Tesfaye, a macroeconomist speaking to The Ethiopian Herald.
“Professionalism is the missing link in Ethiopia’s quest for economic transformation as well. Without institutional strength sustainable growth is deemed to be failed. Infrastructure led economy only come to fruition when institutions are strong.”
As developing country, Ethiopia needs to tap resources from all corners of the world. It should exhaustively and actively make use of bilateral and multilateral cooperation, he says. “Economic diplomacy needs to be diversified and professionalized. Such activities need to be supported with strategies, which guide its relation with IMF, BRICS and other alliances.”
The country needs to sale the country to the world. With its growing economy and raising middle class population, the country carries comparative economic advantages in terms of attracting multinational companies like Samsung. In this regard, the country needs to speed up regional integration and build institutional capacity so that the reputable companies make their way to the country. But, supporting domestic companies also paves a way to creating giant local industries, he adds.
While whether how we need to copy the models in which the countries adopted is debatable, there are best practices where the countries can emulate, says Dr. Samuel Tefera, Assistant Prof and Asian Desk Coordinator at the Centre for African and Asian Studies, Addis Ababa University.
Both Japan and South Korea have aggressively worked on backward linkage where local cottage industries are nurtured by experienced foreign investors. Small and medium industries where linked with big foreign investors. This provided a leeway for local industries to acquire knowledge and technology. It was through joint venture requirements that they now have reputable and mammoth industries according to him.
“The countries adopted strong protectionist approach particularly during the first years of the economic takeoff. But the current global structure does not allow us to put in place strong protective measures. But, we need to at least put in place measures that would protect national interest.”
Industry learning institutions linkage is the other approach which helped the countries picks up rapid and sustainable economic turn; he says adding that with the linkage, learning institutions have been able to provide industries with efficient workforce. This contributed to economic turn. And this is what Ethiopia must throw its full weight behind ahead. “Essentially, the countries were be able to guide their economic strategies and models with researches. So, this teaches us a great deal of lessons to us that we need to enrich our economic models with scientific studies and explanations.”
To create vibrant industries which are familiar in Asian countries, Ethiopia needs to invest more in selected sectors by identifying Ethiopia’s marketable commodities. Countries like Japan and South Korea have been able to identify their marketable commodities. The electronic and automotive giants we see are the very results of this approach, he underscores.
Most of relations are very much tied with benefits. Hence, Ethiopia should position itself in right way where it can benefit from bilateral and multilateral economic frontiers. It is up to the country to strike a balance between the different world’s leading economic players.
The Ethiopian Herald, September 6/2019
BY DESTA GEBREHIWOT
