Explaining Ethiopia’s Growth Acceleration—The Role of Infrastructure and Macroeconomic Policy

Ethiopia has experienced an impressive growth acceleration over the past decade. This was achieved on the back of an economic strategy emphasizing public infrastructure investment supported by heterodox macro-financial policies. This paper identifies the drivers of Ethiopia’s recent growth episode a...

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Main Authors:	Moller, Lars Christian, Wacker, Konstantin M.
Format:	Journal Article
Published:	Elsevier 2018
Subjects:	ECONOMIC GROWTH DETERMINANTS OF GROWTH ECONOMIC POLICY INFRASTRUCTURE MACROECONOMIC POLICY HETERODOXY
Online Access:	http://hdl.handle.net/10986/29224

id	okr-10986-29224
recordtype	oai_dc
spelling	okr-10986-292242021-05-25T10:54:43Z Explaining Ethiopia’s Growth Acceleration—The Role of Infrastructure and Macroeconomic Policy Moller, Lars Christian Wacker, Konstantin M. ECONOMIC GROWTH DETERMINANTS OF GROWTH ECONOMIC POLICY INFRASTRUCTURE MACROECONOMIC POLICY HETERODOXY Ethiopia has experienced an impressive growth acceleration over the past decade. This was achieved on the back of an economic strategy emphasizing public infrastructure investment supported by heterodox macro-financial policies. This paper identifies the drivers of Ethiopia’s recent growth episode and examines the extent to which they were typical or unique. It combines country-specific information with the results of a cross-country panel regression model. We find that Ethiopia’s growth is explained well by factors correlating with growth in a broad range of countries in recent decades, including public infrastructure investment, restrained government consumption, and a conducive external environment. On the other hand, we argue that the policy mix that supported very high levels of public investment in Ethiopia was, to some extent, unique. Interestingly, macroeconomic imbalances due to this heterodox policy mix only moderately held back growth which helps explain why Ethiopia was able to grow so fast in spite of their presence: their negative effects were quantitatively much less important than the positive growth drivers they helped to achieve. The results suggest that “getting infrastructure right” may outweigh moderate shortcoming in the macro framework at early stages of development. We further relate this country-specific finding to the recent growth literature. 2018-01-23T19:59:15Z 2018-01-23T19:59:15Z 2017-08 Journal Article World Development 0305-750X http://hdl.handle.net/10986/29224 CC BY-NC-ND 3.0 IGO http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank Elsevier Publications & Research :: Journal Article Publications & Research Africa Ethiopia
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
topic	ECONOMIC GROWTH DETERMINANTS OF GROWTH ECONOMIC POLICY INFRASTRUCTURE MACROECONOMIC POLICY HETERODOXY
spellingShingle	ECONOMIC GROWTH DETERMINANTS OF GROWTH ECONOMIC POLICY INFRASTRUCTURE MACROECONOMIC POLICY HETERODOXY Moller, Lars Christian Wacker, Konstantin M. Explaining Ethiopia’s Growth Acceleration—The Role of Infrastructure and Macroeconomic Policy
geographic_facet	Africa Ethiopia
description	Ethiopia has experienced an impressive growth acceleration over the past decade. This was achieved on the back of an economic strategy emphasizing public infrastructure investment supported by heterodox macro-financial policies. This paper identifies the drivers of Ethiopia’s recent growth episode and examines the extent to which they were typical or unique. It combines country-specific information with the results of a cross-country panel regression model. We find that Ethiopia’s growth is explained well by factors correlating with growth in a broad range of countries in recent decades, including public infrastructure investment, restrained government consumption, and a conducive external environment. On the other hand, we argue that the policy mix that supported very high levels of public investment in Ethiopia was, to some extent, unique. Interestingly, macroeconomic imbalances due to this heterodox policy mix only moderately held back growth which helps explain why Ethiopia was able to grow so fast in spite of their presence: their negative effects were quantitatively much less important than the positive growth drivers they helped to achieve. The results suggest that “getting infrastructure right” may outweigh moderate shortcoming in the macro framework at early stages of development. We further relate this country-specific finding to the recent growth literature.
format	Journal Article
author	Moller, Lars Christian Wacker, Konstantin M.
author_facet	Moller, Lars Christian Wacker, Konstantin M.
author_sort	Moller, Lars Christian
title	Explaining Ethiopia’s Growth Acceleration—The Role of Infrastructure and Macroeconomic Policy
title_short	Explaining Ethiopia’s Growth Acceleration—The Role of Infrastructure and Macroeconomic Policy
title_full	Explaining Ethiopia’s Growth Acceleration—The Role of Infrastructure and Macroeconomic Policy
title_fullStr	Explaining Ethiopia’s Growth Acceleration—The Role of Infrastructure and Macroeconomic Policy
title_full_unstemmed	Explaining Ethiopia’s Growth Acceleration—The Role of Infrastructure and Macroeconomic Policy
title_sort	explaining ethiopia’s growth acceleration—the role of infrastructure and macroeconomic policy
publisher	Elsevier
publishDate	2018
url	http://hdl.handle.net/10986/29224
_version_	1764468805798461440

Explaining Ethiopia’s Growth Acceleration—The Role of Infrastructure and Macroeconomic Policy

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