BY TEKLEBIRHAN GEBREMICHAL
General world history and specific empirical evidence show that relatively fast economic development is attained through the promotion of self–interest in the context of fair competition under a neutrally and impartially applied legal framework.
Needless to say, the naturally ingrained self–interest of human nature does exist in Ethiopia. What do not exist are fair competition and an impartially applied legal framework.
Further, the existing legal framework does not fully recognize the naturalness of self–interest and the dynamism and progressiveness of free and fair competition.
It is a matter of common observation that unbridled and unregulated self–interest can lead to the use of armed force and to political power gained via such force. There is no doubt that political power is required to govern the body politic and the body economic.
But it must at all times be obtained on the basis of the will and consent of the governed. Hence, what the free and fair market is to economic profit and gain, the free and fair election is to political power. It is on the basis of the foregoing ideas that the following tentative Economic Manifesto for Ethiopia has been prepared.
The ten basic tenets of the Economic Manifesto for Ethiopia are the following:
1. A single economic space and market;
2. An inventory of the country’s natural resources including its labour force;
3. An education system that meets international standards;
4. A private–sector driven economic system;
5. An enabling government sector with emphasis on basic infrastructure and transformative key industries;
6. A country-wide land use plan which allows private, communal, government and lease ownership and tenure;
7. A banking system which uses credit for economic development, with a strong central bank;
8. A center for entrepreneurship where gifted entrepreneurs receive further special training;
9. Effective monetary and fiscal policies;
10. An internationally accepted fair and efficient legal framework.
We shall now try to examine each of these tenets at some length as follows:
A single economic space and market
Ethiopia is a single economic space with a single and uniform market. Border demarcations between provinces are only administrative lines and therefore do not represent any kind of physical or non–physical restrictive practices, including the levying of tariffs or any other form of taxation.
The free movement of subjects, goods, services, and capital is constitutionally and legally guaranteed and protected. Business incorporation, production, distribution and employment are subject to the same country–wide laws and regulations.
Market prices may vary due to transport and regional labour cost differentials but price trends generally move in similar directions.
An inventory of the country’s natural resources
An officially certified inventory of the country’s resources including climate, land, forest, wild animals, livestock, goats, sheep, camels, birds, other animals, minerals including gold, iron, ore, platinum, potash, water, etc. should be published with reliable estimates and characterization, as may apply, for use by economic planners, domestic investors and foreign investors.
An education system that meets international standards
Already much rethinking of Ethiopia’s education system has been done. In fact, a new education policy has already been introduced, but it is worth emphasizing that although general enlightenment of the Ethiopian people through education is good in and of itself, it may well be self–defeating if it does not lead to effective and productive employment in the teaching profession; in the production of goods and services (other than teaching and research) and in research and development.
The usual classification of formal education into academic and vocational streams is still useful in that the academic stream emphasizes theory all the way to the tertiary level while the vocational stream need not go beyond 12 plus 2, but will continuously be upgraded by the academic stream.
The academic stream ultimately goes to a high-level professorship in the teaching profession which may be combined with high–level research and development. It goes without saying that Ethiopia’s education system should be of the highest standard and quality and should be assisted by the state-of–the–art technologies.
A private-sector driven economic system
As of the present time, about 62 million of Ethiopia’s estimated 115 million population should be employed if full-employment in its literal interpretation is to be attained.
If we define a private–sector driven economy to be one where 80 percent of the labour force or population of working age is employed in the private sector, which includes peasant–agriculture, single – person proprietorship and private /foreign investment joint ventures, then about 50 million people would be working in the private sector and the remaining 12 million people or 2 percent in the government civil service, government-owned development agencies and enterprises.
The total number of peasant farmers who account for 96 percent of agricultural, mainly crop, production is roughly estimated at 15 million. That is out of a total 40 million people who are supposed to be fully employed in the private sector in rural Ethiopia, which indicates a very high level of overt and disguised rural unemployment. The situation is no better in urban areas. So, the potential for private–sector driven economic growth in Ethiopia is immense.
An enabling government
The concept of a developmental state is often misconstrued. It definitely does not mean a government that replaces the private sector. That would be a communist–oriented socialist government, which has historically been already discredited.
A correct interpretation of the idea of a developmental state is one which builds basic infrastructure including roads, power and water supply systems, large irrigation dams, telecom systems, etc., develops key strategic industries, all of which enable the private sector to do business within an internationally accepted overall legal framework and business and company laws.
Land use plan
In addition to legally recognized land tenure patterns, the preparation of a country–wide land-use plan both for rural and urban land is essential.
A Banking System which uses credit for economic development
In an economically backward country such as Ethiopia, the banking system’s main task should be to use credit for rapid economic development. It should at the same time be its main source of income and profit. Unfortunately, this has not been the case in Ethiopia where credit to Ethiopia’s economic mainstay, agriculture, has been no more than 5 percent of the total.
A center for entrepreneurship
Ethiopia’s deteriorating quality of education has negatively affected all aspects of human performance in all sectors of society, including the economically crucial talent and capability of entrepreneurship.
Hence, side by side with attempts to improve the overall quality of education, special emphasis should be placed on entrepreneurial talent and ability through the establishment of a high–quality center for entrepreneurship.
Effective monetary and fiscal policies
A central bank that cannot control the volume of money to keep inflation and undue exchange rate depreciation in check is not worth having. Hence, the importance of monetary policy in a backward economy such as that of Ethiopia. Likewise, a ministry of finance that does not appreciate the virtue of a balanced budget and allows fiscal deficits to run amok causes more harm than good.
An internationally accepted legal framework
It is abundantly clear that an economy is run on the basis of transparent economic, business, company, property, financial, banking, fiscal, etc. laws, rules and regulations. What is important here is that these laws and regulations must be conducive to private initiative, free and fair competition and to overall rapid economic development.
Clarion Call!
Politics is cheap! Tribalism is deadly! Economics is complicated and messy, but once perfectly understood, it is the essence of life itself! It gives you a balanced diet, a healthy body and mind and the capacity for a wholesome and productive romance! In short, economics, if properly understood and utilized, gives you a life worth living! Unfortunately, economics will not yield its hidden golden potential, unless we are able to extract the nectar of politics from its submerged core: democracy! So, Ethiopian economists, unite! Force Ethiopian politicians, peacefully, to extract the nectar of political science from its hidden core so that Ethiopian economists may get on with the all-important task of making life worth living in Ethiopia!
The Ethiopian Herald January 20/2021
