Development in Ethiopia

Development in Ethiopia Free Essay


Prosperity of the poor third-world countries is under the stiff scrutiny of the developed nations and other international institutions such as the World Bank, IMF, and WTO. The organizations make efforts in documenting economic and social records of welfare and offer suggestions for some areas to improve in order to render equitable progress of the nations. This paper will take into consideration the current socio-economic aspects of Ethiopia, its relationship with other institutions as well as social problems that hinder the development.

Socio-Economic Indicators

Ethiopia has been on steady economic growth rate, with an estimate of 10.8 percent increase in the GDP per year between 2004 and 2013. The figure supposes the scenario of other frontier countries and some developed nations (World Bank, 2014). The reasons, which attributed to the change in GDP, include massive investment in the public infrastructure that provides easy access to the markets hence improving the income. Similarly, reduction in penury has contributed to the rise of Ethiopia's GDP (Kahsay, Kuik, Brouwer, & Van der Zaag, 2015).

The World Bank assessment on the poverty state of Ethiopia in 2011 unearthed some decline in the number of poor people, 33 percent were left out of 44 percent in the subsequent years (Dercon & Christiansen, 2011). The reasons behind the indigence alleviation were enhancement in agricultural production, positive changes in healthcare provision, improved education system and progressive economic growth. However, the nation still experiences poverty and has been devising strategies to combat the rising amount of impoverished citizens.

Income distribution of Ethiopia has been equal to the continuous efforts of the government to control poverty per household especially between 2004 and 2010. The main strategies that are useful in managing inequality in income distribution are fiscal policies such as income taxes and transfers, which minimize disposable revenue, increasing labor efforts to foster savings and investments per individual level; significant fiscal space for pro-poor spending, and indirect subsidies to the vulnerable penurious citizens in the form of electricity and other critical services (Olinto, Beegle, Sobrado, & Uematsu, 2013). However, the most recent studies have unearthed widening of the economic gap lately. The factors responsible for the disparities comprise continuous crave for higher education and changes in the households where young people prefer staying alone (Babulo et al., 2009).

The government of Ethiopia offers some subsidized programs to access electricity with an estimate of Birr. 1.5 billion, the figure that is nearly 2.6 percent of the state spending (Mberu, 2006). Thus, this aims at promoting the equitable sharing of such resources, cut overspending by the poor on the latter, and after that boosting investments in other business sectors. Therefore, there is free access to power.

Regarding education, the number of adult literates is still low. According to Hanjra, Ferede and Gutta (2009), the number of literates aged over fifteen constitutes 39 per cent. The quality of primary education has reduced. Moreover, there are many cases of primary school dropouts, up to 63 percent in 2014 (Morrow, 2015). Reasons for the decline include incapability of students to understand and integrate the core language, English in the academics hence resorting to dropping out or registering low performance. In addition, the lack of interactive and motivational teachers results in low students’ morale on education. Furthermore, the number of trained primary school pedagogues is 56.8 percent while the students-teachers ratio is 53.7 per cent (Morrow, 2015). The number makes it almost impossible to maintain proper interaction between pupils and educators.

Health measures of Ethiopia are quite peculiar as compared to the developing nations. The state has comparatively higher life expectancy at birth, 64 years, unlike other frontier countries (Weldearegawi et al., 2013). Other health indicators include low adult mortality rate of approximately 198 per 1000 persons, reduced prevalence of HIV/AIDS to about 1.2 per cent and low infant mortality rate of 44 children per 1000. The driving force for health care improvement was induced by reformation in hospital services. The new strategies governing current hospital operations were drafted in 2009 in collaboration with other medical institutions such as the Clinton Health Access Initiative and the Yale Global Health Institute, which introduced new guidelines that made the performance more efficient (Weldearegawi et al.,2013). Additionally, the government of Ethiopia is highly committed to overspending on healthcare that is always 5 percent of the country's GDP.

With regard to climate, Ethiopia produces small Carbon emissions per capita of 0.1 per cent. However, the place is vulnerable to certain gradual climatic changes such as the rising temperature, which is expected to occur at the rate of 0.4 C per decade (Di Falco, Veronesi, & Yesuf, 2011). The first and temporal precipitation are also rising as compared to fifty years ago. Should the trend continue, the region would be more subjected to reduced agricultural production due to the frequent variability of climate, inadequate supply of quality water, increased evapotranspiration and excess flooding from precipitation and dissemination of water-borne diseases such as malaria.

Relationship of Ethiopia with Other Institutions

Ethiopia is in effective coordination with the IMF organization with the primary intention of reaching financial and economical solutions (Baylis, Smith, & Owens, 2013). The IMF officials and the economic personnel of the country hold annual bilateral discussions. For instance, the technical expert from IMF  assists in collecting data and discussing the information related to finance and national economy and finally prepares the report with the relevant guidelines and policies to promote economic performance (Baylis et al., 2013). IMF takes proactive measures in providing critical data necessary to control inflation and stabilize economic growth.

Similarly, IMF has been lending granting to Ethiopia at the time of signing the treaty. The organization is concerned with reducing inflation rates, severity of budget and trade deficits as well as giving avenues to settle debts of other financial institutions such as the World Bank. The establishment has continually helped the government introduce and implement anti- inflation programs, liberalize control on foreign exchange and modify the standard exchange rates.

Like the IMF, the World Bank has been working tirelessly to support Ethiopia financially. The World Bank loaned the country in 1951 for the first time, five years after joining the organization in December 1945 (World Bank, 2012). The World Bank has been supporting various projects and programs in Ethiopia, giving technical assistance and advancement policies that promote economic growth. Moreover, the state is a beneficiary of the International Development Association (IDA) that also works hand-in hand with other financial institutions to reduce financial obligations of the less prosperous nations under the program conditions of Heavily Indebted Poor Countries (HIPC) Initiatives.

Furthermore, Ethiopia has strong established relationship with WTO. The body helps the nation scale up in the trade by playing the following roles; enabling access, the MFN status and preferences (Baylis et al., 2013). MFN advocates for the tariff reduction and favorable business environment. In addition, the WTO has provided Ethiopia and other global countries in the world market with legal protection, usually in the form of dispute settlement. However, this system  appears with limitation especially in the developing states lacking the means to fight legal battles. On the other hand, WTO offers some privileges in the form of fair and adequate trade implementations with clearly defined procedures that are commonly motivational, transparent and highly accessible. Besides, WTO assists in availing the business news and statistics as well as documenting the status of the market for Ethiopian products.

Contrary to the continuous benefits from the WTO, Ethiopia took a firm stand in 2015. The confirmation by the Trade Minister, Kebede Chane, maintained that the nation would delay rejoining the WTO to enable its full liberalization of critically regulated telecom and banking industries (Masselu, 2016). The Minister reported numerous instances requiring the country to explain the national plan of privatization of service industries including the power industry. The sentiments were made in response to the very strict laws drafted by WTO  The latter allow member states to promote a few investments, restrict liberalization and advocate for controlled appearance of new markets, usually when the economy has been expanded (Masselu, 2016).

Socio-Economic Problems in Ethiopia

Ethiopia profoundly experiences food shortages. The unfavorable climatic patterns such as severe droughts, land degradation that has gradually resulted in desertification and prolonged precipitation due to climatic changes, have continually declined the output in food production. Reduction in food has led to two great consequences. First, it has promoted substantial inequality in the country. The disparity occurred since the less fortunate people can hardly cope with the increasing prices for sustenance. The most affected community group includes poor rural residents; these people make efforts to buy the basics and remain with little to invest. Furthermore, it is only the impoverished who are generally overwhelmed with paying school fees to the siblings who resort to school dropouts, thus worsening the future and economic prosperity of the lower class. Ultimately, a wide gap has appeared between the wealthy and the financially challenged.

Secondly, penury results in direct malnutrition of the infants. In Ethiopia, food provision is a significant problem due to the hindering factors. Consequently, prices for nourishment are high. Again, the poor become the victims of circumstances since they can hardly afford to buy and prepare balanced meals to their families. Thus, young children often become malnourished with nutrition-related deficiencies such as anemia, kwashiorkor, marasmus and other shortcomings.

Civil wars and unrests are commonly reported scenarios in Ethiopia. Systematic marginalization and persecution of the national minorities have led to a destabilized peaceful state. The great instance to reminisce is the Oromo, who are the dominant ethnic group in Ethiopia and the horns of Africa that are known for organizing frequent protests. Such conditions instill fear and panic for different people including investors.

Political instability is another profound factor limiting Ethiopia. The leaders in power are corrupt at all cost and practice poor governance. Their failure is quite eminent; for instance, they have been overwhelmed to control the Oromo protest. Moreover, the authorities failed to strategize on food securities in order to reduce malnutrition cases due to starvation of the low-income families.

The rate of HIV/AIDS infection is very low as compared to other developing nations. The primary reason underlying the decline is the increased awareness of HIV/AIDS. Men are more conscious of the issue than females, with 99 percent and 97 per cent correspondingly. Furthermore, careful medical attention is provided primarily for protective mothers to avoid infection during pregnancy, birth and after delivery. However, the cases of staff incompetence to offer quality education and poor management of hospital facilities with some examples of faulty equipment still propagate the prevalence (Weldearegawi et al., 2013).

Importantly, the country has been experiencing the average inflation rates, for instance, the latest inflation of October 2016 shows a lower degree of 5.6 per cent as compared to 6.9 percent of the previous year. Nevertheless, inflation is stabilized due to acceptance of the pieces of advice from the expertise of the higher international financial institutions such as the IMF. The government is also flexible to adopt the measure that assists in preventing prices escalation.


The economic and social developments in the LDCs have been in constant jeopardy. The poor economic planning with inequitable sharing of the resources and rapid instances of inflation coupled with reduced investments are continually thwarting the economic growth and provision of critical social amenities. The Ethiopian government should, therefore, embrace proper economic planning, ensure equality in sharing of resources, promote educational system for the youth, and control internal wrangles and work ceaselessly to eradicate poverty by providing relief food to disabled families. The phenomenon will boost the economic progress to a significant level.

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