AN ESSAY ON THE POLITICAL ECONOMY OF INDUSTRIAL POLICY IN ETHIOPIA

Abstract

In this dissertation, I present a political economy analysis of the post-1991 industrial policy (IP) in Ethiopia. In Chapter one, I set the context for the study and present the research methodology. In the second chapter, I present a comprehensive overview of the literature. After introducing key concepts and reviewing old and new debates on IP, I justify why a political economy framework is a promising way to analyze industrial policy. In Chapter three, I present the historical and current political and economic profile of Ethiopia. I emphasize Khan’s (2005) notion of a “political settlement” as a way of understanding the political economy of a nation in relation to its industrial policy outcomes. I also employ as a main analytic lens Whitfield et al.’s (2015) framework for the politics of industrial policy in Africa. This lens offers three conditions – mutual interest, pockets of efficiency and learning for productivity – as necessary for successful implementation of industrial policy. The Whitefield framework argues that the emergence of these three conditions is shaped by the type of clientelist (donor/client) political organizations that exist in a nation. As such, the model places strong emphasis on material incentives and constraints. In Chapters four and five, I test the relevance of this model to explain and evaluate Ethiopia’s IP. The analysis therein is divided into three politically significant time periods. The focus is to investigate the relations between the dominant clientelist political organization in each time period and the existence or absence of the three Whitfield conditions. The study shows that the Whitfield model neither adequately explains IP results nor guides Ethiopia toward better results. In a bid to establish a more credible and complete version of political economy, the study builds on and supplements the Whitfield model by defending an additional condition necessary for IP success, namely, the political and moral power of concerned citizens. Such an alternative approach I develop in Chapter six, which highlights the importance of such notions as fairness and equity, citizen rights, participatory institutions and civil society in the theory and practice of moral economy.