It has been a while since Ethiopia earned the “African tiger” reference which came from the famous “Asian tigers”. The term the Asian Tigers refers to the countries South Korea, Taiwan, Hong Kong and Singapore (and primarily their economies) and the term started being commonly used in the 1970s. They have been labeled the four Asian tigers since the 1960s when they all followed a similar path to development and went on to become developed at the start of the 21st Century.
These countries have been hailed as models of development for other emerging economies. The Four Asian Tigers have developed in a slightly different way to most of the other developed countries in the world. The conventional step taken to kick start development in the 1960s was to implement import substitution. This involved raising tariffs to reduce the imports of consumer goods, thereby allowing a country's own industry to develop and stabilize.
The Asian Tigers, however, decided to capitalize on the growing materialistic attitude and consumerism developing in much of Europe and North America and so pursued an export-driven model of industrialization and development instead. This was achieved by rapidly increasing the production of goods that could be exported to the highly industrialized nations of the world.
Various sources indicate that the main factors for their growth are mainly high saving rates and investment rates, outward orientation, factor productivity macro discipline, and other public policies. The common characteristics of the Asian tigers are:
Focus on exports: where as other developing countries use import substitution strategies for economic development, the Asian tigers focused on export oriented industrial development to richer countries. Domestic production was discouraged through government policies such as high tariffs.
Human capital development – they developed specialized skills for their personnel in order to improve productivity.
They had an abundance of cheap labor
Sustained rate of high growth rates (probably double digits) for decades
Non democratic and relatively authoritarian political systems during the early years
High tariffs on imports in the early days
High saving rate
Sources state that a look at Singapore in particular between 1966 and 1990 show that the economy grew at a remarkable 8.5% per annum, 3 times faster than that of the growth rate of the US. Per capita income grew at 6.6%, roughly doubling every decade. The employed share of the population surged from 27% to 51%. The educational standard of the workforce was dramatically upgraded. The country grew tremendous levels of physical capital and investment as share of output rose from 11% to more than 40%. All this is part of the developmental miracle the country has registered over the stated period of time.
Now that we have some idea of what the Asian tigers are and identified their common characteristics, let’s see if Ethiopia indeed fits the “African tiger” reference by analyzing the changes in the country against a good a half of the common characteristics. I think it would be fair to say that the fulfillment of a half of the characteristics of the Asian tigers by Ethiopia makes the reference valid as the country has the longest part of its future ahead of it to register growth levels equating those of the Asian tigers.
Focus on Exports
As has been mentioned above, the Asian tigers adopted exports as the main strategy of international trade instead of the then fashionable policy of import substitution. The present five year plan of the country, the Growth and Transformation Plan (GTP II) states that industrial expansion will be promoted based on both export oriented and import substituting industries.
Although tremendous focus has been accorded to the export sector in Ethiopia, the strategy in general focuses not only on exports but import substitution as well. Export promotion and diversification have generally enjoyed a bask in the sun during the last decade or so. However, export promotion and diversification had declined in the last five years.
Human Capital Development
The Asian tigers are known for developing_specialized skills for their personnel in order to improve productivity and the emphasis they allot education. GTP II has earmarked a major emphasis on education. On its education and training section, the document states that the government will increase its efforts in human resource development through improving access and quality of education.
The document states that efforts will be_made to gradually address issues that limit children in particular girls and women enrollment in terms of improving access to education. As for improving quality of education measures will be taken to address the shortcomings through increasing the number of teachers and schools. The government will enhance the implementation of General Education Quality Improvement Program.
The GTP also indicated the use of the TVET System to serve as a potential instrument for technology transfer, through the development of occupational standards, accreditation of competencies, occupational assessment and accreditation, establishment and the strengthening of the curriculum development system. TVET institutions will serve as the centers of technology accumulation for Micro and Small Enterprises (MSEs).
Abundance of cheap labor
The Asian tigers were characterized by an abundant cheap labor. The International Labor Organization (ILO) estimated Ethiopia’s labor participation rate to be a consistent 84% between 2010 and 2012. Labor force participation rate is the proportion of the population ages 15 and older that is economically active: all people who supply labor for the production of goods and services during a specified period.
The World Bank puts Ethiopia’s total labor force in the years between 2010 and 2014 at_43,591,175. Total labor force comprises people ages 15 and older who meet the International Labour Organization definition of the economically active population: all people who supply labor for the production of goods and services during a specified period. It includes both the employed and the unemployed. While national practices vary in the treatment of such groups as the armed forces and seasonal or part-time workers, in general the labor force includes the armed forces, the unemployed and first-time job-seekers, but excludes homemakers and other unpaid caregivers and workers in the informal sector.
With the total population of Ethiopia estimated to be in the ninety millions though, the World Bank’s estimates could run short of the reality as the 84% labor participation rate of the country identified by ILO takes the figure up to 77-80 million. With the price of labor set at one of the cheapest in the world, not only European and American but Chinese companies as well are migrating in numbers to the country.
Sustained rate of high growth rates (probably double digits) for decades
The Asian tigers experienced decades of very high growth rates. In the case of Ethiopia, the economy has been growing for about a couple of decades now but double digit growth averaging 10.4% has been registered for over a decade. Recent data indicate that Ethiopia is the third fastest growing economy in the world next to China and India. Ethiopia has also been identified recently as a country on course to double its per capita income within twelve or thirteen years.
Although it has just been a decade and half since Ethiopia started to register consistent double digit growth, the trend this far shows that the economy has picked up momentum to continue growth for a number of years. In line with forecasts made five years ago, Ethiopia is currently the fastest growing economy in the world.
The growth in the country is also noted for being cross-sectoral as the agricultural, industrial and service sectors have all enjoyed significant transformation within the last couple of decades. This cross-sectoral growth is considered to be the stable foundation upon which the country’s transformation is expected to be built.
BY BEREKET GEBRU