Ethiopia has embarked on a transformational journey of becoming a low middle-income carbon-neutral economy by 2025. To attain this goal, Ethiopia needs to sustain the high growth episodes that have been observed over the last decade by deepening structural change in its economy. The Second Growth and Transformational Plan (GTP II) (2015/16-2019/20) envisages an emergence in the form of desirable outcomes of structural transformation in a relatively shorter period of time as in the case of South East Asian countries.  This is to be achieved by shifting economic activities from f low productivity   to high productivity sectors, especially in the manufacturing sector. The pursuit for industrialization is the most viable option for ensuring structural transformation.

The current policy response for industrialization through the State’s active role has benefitted from the country’s long- held tradition and experience of planning over several decades, evident since 2010/11 with the launch of the growth and transformation plan (GTP). Planning in Ethiopia began as early as 1945 when a ten year industrial strategy was elaborated. A formal five – year development plan was launched in 1957 during the Imperial Government of Ethiopia with the major objective of laying foundation for an economic take- off. 

Ethiopia’s experience in the last two decades has demonstrated that emergence is a process where sequencing and smart prioritization of policy targets is critical.  There is a need to understand that development processes are iterative where past experience informs the present.  Pragmatism in approaches to development and seeking alternative paradigms becomes key. In all these, the role of the state is crucial.  The series of development plans produced over the last two decades demonstrated how every new plan was built on the lessons of the previous plan. In 2003, a three – year development plan entitled – “Sustainable Development and Poverty Reduction Program (SDPRP) was launched to mainly pursue the tenets of the ADLI policy. As a result, SDPRP gave more emphasis to agriculture, education, and infrastructure development.  The country recorded a GDP growth rate of 5.9 per cent during SDPRP.  In comparison to a population growth rate of 2.9 per cent during the same period, the growth observed under SDPRP was not enough to lift many people out of the quagmire of poverty. Download the document