Ethiopia Comes to a Crossroads on Economic Reform
Apr 3, 2019 | 10:00 GMT
(LUDOVIC MARIN/AFP/Getty Images)
- Ethiopia is unlikely to totally abandon its developmental state economic model, which gives the state a leading role in fostering development but has also burdened local banks, led to increases in foreign debt levels and suppressed the private sector.
- While Prime Minister Abiy Ahmed is likely to make some progress toward liberalizing the economy, he and his allies will encounter resistance from a bureaucracy that favors growth fueled by the state rather than the private sector.
- If Addis Ababa fails in its gamble to switch to an economy driven by more private sector growth and consumption, it might not be able to capitalize on a wave of investment interest in East Africa to make the leap to the next level of economic development.