It is well recognized that the need for Ethiopian economic development is ever urgent as the country has to confidently feed the over 120 million population it has been housing. Hence, the country is expected to carefully calibrate growth-enhancing policies, embarking on the fundamental economic and growth pillars like investment, tourism, import substitution and export promotion, among others.
Yes, the country and its people should work hard and determinedly so as to promote peace and stability via addressing peace and security concerns, economic development pitfalls and the likes.
Keeping this all in mind, The Ethiopian Herald had a stay with Mulualem Ferede, an economist who graduated from Bahir Dar University and working for a private firm as an economic consultant, to garner professional standpoint and comment about on what Ethiopia has to focus to bring about real change not only economically as well as socially and even politically as all are highly intertwined and run towards an intended target-making the country a middle income one within the shortest time possible.
He said, “The process of economic growth is a highly complex phenomenon and is influenced by numerous and varied factors such as political, social and cultural factors though the principal factor affecting the development of an economy is the natural resources coupled with the land area and the quality of the soil, forest wealth, good river system, minerals and oil resources, good climate, you name it.” no doubt, a country deficient in natural resources may not be in a position to develop rapidly as the existence of natural resources in abundance is essential for viable economic growth.
He further elucidated that agriculture, tourism, investment, trade, infrastructure development, power and other related aspects are the primary pillars that predominantly help make progress and change in all aspects. The issue of resources at hand has come to the forefront to well back here are thinking of investment, tourism or agriculture could hardly be attained.
As to him, whether natural resources are un-utilized, underutilized or mis-utilized, and this is one of the reasons of countries’ backwardness. Look! What a paradox is widely witnessed in the world. For instance, nations like Japan, Singapore etc. are not endowed with abundant natural resources but they are among the developed nations of the world as these countries and their people have shown commitment towards preserving the available resources, putting best efforts to manage the resources, minimizing waste of resources and exerting other related relevant sources.
He further elucidated that the effort geared towards fostering economic development of the country should not be left only to the government and other concerned bodies such as ministering and organizations working on various areas, instead it has to be a priority addendum of all walks of life as everyone does have a share along that line.
As to Mulualem, capital formation is another important factor for development of an economy. Capital formation is the process by which a community’s savings are channelized into investments in capital goods such as plant, equipment and machinery that increases nation’s productive capacity and worker’s efficiency thus ensuring a larger flow of goods and services in a country. The process of capital formation implies that a community does not spend whole of its income on goods for current consumption, but saves a part of it and uses it to produce or acquire capital goods that greatly add to productive capacity of the nation.
Technological progress is a very important factor in determining the rate of economic growth. The technological progress improves an ability to make a fuller use of the natural resources e.g. with the aid of power – driven farm equipment a marked increase has been brought about in agricultural production.
In fact economic development is facilitated with the adoption of new techniques of production. True, Ethiopia has to work hard in due course of addressing shortage of capital, modifying weak infrastructure, effectively utilizing unskilled labor and wisely and widely utilize natural resources with which the country is highly endowed.
Investment and tourism are also decisive factors for economic growth on which the government and other stakeholders working in the areas are expected to focus. Social factors including social attitudes, social values and social institutions which change with the expansion of education and transformation of culture from one society to the other are also instrumental in boosting people-to-people ties and helping swell working culture.
According to Mulualem, in this era of globalization and information communication epoch, homegrown economy which helps declare independence, quality economic growth and shared prosperity, economic productivity and competitiveness, technological capability and digital economy as well as sustainable development financing and private sector-led growth, resilient green economy and institutional transformation are among the pillars of economic growth and development. Hence, Ethiopia has to give priority and public mobilization needs to be pumped well to make a difference in all aspects.
As part of the homegrown economic style, ‘Ethiopia Produces’ is taken as the main base for the economic development of the country. As it is a national effort to create a competitive manufacturing industry by solving the challenges in the sector in a sustainable and comprehensive manner, the moment has to be well expanded and it needs to be made wide to include the most pillars of economic growth as the movement helps incorporate all means for economic growth.
He said, “Import substitution has to be given priority as it could be a means to increase the role of the expansion of sustainable development and investment and provide the necessary assistance to export rise. Economic growth reflects the growth of national or per capita income. Economic development implies changes in income, savings and investment along with progressive changes in socio- economic structure of country including institutional and technological changes.”
Of the pillars of economic growth, greater openness to new domestic and foreign firms, improve transport and telecommunications infrastructure and improve regional trade and investment links are among the major ones interconnected economic growth, tourism and investment.
Ethiopia is a highly agrarian economy that requires development strategies to search for the right balance between pro-poor investments in agriculture and rural development. Despite many constraints, Ethiopia has made considerable progress on a number of economic fronts, all of which may lay the foundation for more rapid economic transformation in the near future. Not only is Ethiopia increasing physical infrastructure such as roads and electricity lines, but communication infrastructure is expanding as well.
Unequivocally, the national strategies framed to make the economy of the country boosted and ultimately help the nation address myriads of the problems from which it has been suffering. Here, the point is all pillars of economic growth, as stated earlier, have to come to the forefront as they are instrumental in making the difference in the country. The country has to capitalize on various sectors like investment and tourism as these are predominantly becoming change engines and growth pillars.
“The country is definitely endowed with immense natural resources, huge assets, and capable labor to discharge responsibilities. What remains is synchronizing all this and translating theories into practical actions to make a difference,” he said.
Since cooperation and wealth amalgamation matters the most, all concerned are expected to do more along this line via effectively exploiting the fundamental pillars of the economic growth in the nation.
In a nutshell, Ethiopia has to capitalize on all sources of economic growth and meaningfully utilize the major economic pillars thereby enlisting itself in the category of middle income countries apart from ensuring food security and defeating poverty for good.
BY MENGESHA AMARE
THE ETHIOPIAN HERALD WEDNESDAY 17 JANUARY 2024
