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Evaluating the Impact of Export Promotion Policy Incentives in the Ethiopian Manufacturing Sector

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Name of the Asset | Evaluating the Impact of Export Promotion Policy Incentives in the Ethiopian Manufacturing Sector
Type of Asset | Working Paper
Date | February 2019

Since the 1991 economic reforms, Ethiopia has tried different policy measures towards implementing its overarching national development strategy, which envisions economic transformation in which industry overtakes agriculture in terms of its contribution to the overall economy. Despite these efforts, Ethiopia has remained a poorly diversified and industrialized economy. The question of why policy measures have failed to produce expected outcomes has been of interest to both policymakers and researchers.

This paper evaluates the effectiveness of export promotion strategies in Ethiopia’s manufacturing sector. The evaluation was conducted using both quantitative and qualitative techniques after developing a comprehensive theory of change (ToC) underlying the country’s industrial policy. The data used for the quantitative technique were obtained from the annual surveys of Large and Medium Manufacturing Establishments, which had been collected over the period 2000-2015. Impacts were evaluated with reference to the first Growth and Transformation Plan (GTP-I). The qualitative data were collected through firm-level interviews using semi-structured interview guides prepared based on the ToC.
The results of the quantitative analysis show that the government’s intention to increase manufacturing’s share in total merchandize export through improving the intensities and propensities of export sales of priority industries (textile, apparel, and leather and leather products) had only limited success. The overall picture indicates the existence of complex structural problems and a lack of political commitment to policy implementation. Possible policy recommendations for addressing these constraints are discussed at the end of the paper.

Authors | Abdi Yuya AhmadMoges Tufa Adinew
Country and/or Region | Ethiopia  
Name of the Program | Mobilizing Local Knowledge to Improve Competitiveness Strategies
Funder(s) | The Competitive Industries and Innovation Program (CIIP) through the Finance Competitiveness and Innovation Global practice of the World Bank Group. 

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