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CGD in the News

Potentially The China Of Africa (The Ethiopian Herald)

May 14, 2018

From the article:

The Growth and Transformation Plans Ethiopia designed to push its economy into lower middle income status by 2025 bear in them a transition from an agrarian economy to an industrial one. In line with that goal, the country has been striving to draw in foreign investment to boost the manufacturing and industrial sectors.
Those efforts seem to bear fruit as Ethiopia has been ranked the seventh most attractive African country to investors by Africa Investment Index (AII) 2018. With a rapidly growing economy, a huge population of over hundred million, proximity to major international markets, conducive policy environment and a rapidly improving infrastructure, Ethiopia has increasingly become a favorable destination for FDI.
Numerous companies have relocated their manufacturing plants from countries such as Turkey, India and China to Ethiopia over the past decade. European and American companies are also increasingly flocking to the rising investment magnet in East Africa. Internationally recognized apparel, textile and shoe brands have also established manufacturing plants in Ethiopia.
With an 8.5% Percent rate of economic growth forecasted for the next year by the IMF, Ethiopia is expected to retake its position as the fastest growing economy in Africa. According to IMF figures, the country also had an average of 10 percent economic growth over the past dozen years. The sustained rapid economic growth complemented by strong performance in the coming years, gives Ethiopia a positive outlook going forward.
The challenge over the past three years has been the political unrest in different parts of the country. However, that also seems to have abated with the election of the new Prime Minister Abiy Ahmed (Ph.D.). The popularity he receives and the sense of unity he has galvanized among the people seem to have convinced the Ethiopian people that he deserves their co-operation and support. Therefore, the political stability that has been the whole mark of the past quarter of a century is assumed to have been reinstated.
Such suitable conditions are expected to bolster Ethiopia’s stature as an investment hub considerably over the foreseeable future. However, there are those who take this potential to unchartered territory through claims that it might be the new China. In a recent report by CNN entitled “Ethiopia is now Africa’s fastest growing economy,” Vijaya Ramachandran, an economist at the American think tank Center for Global Development (CGD), attributes Ethiopia’s growth to governmental effort to boost industrial production and manufacturing. A report released by Ramachandran and three other academics argues that “Ethiopia can follow in China's footsteps, and become a destination for low-wage manufacturing jobs.”

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