Listen:
Key Points From This Episode:
- The definition of a developmental state and typical examples.
- Learn what a distributive crisis is and how it applies to Ethiopia.
- An overview of the successes and failures of Ethiopia’s government.
- Top-down versus bottom-up factors contributing to Ethiopia’s crisis.
- How centuries of statehood shaped Ethiopia’s developmental drive.
- Explore the evolution of Ethiopia’s land and agricultural sector.
- Ethiopia’s equity and ethnically inclusive developmental strategies.
- Valuable insights into Ethiopia’s industrial landscape.
- Urbanization, industrialization, and the complex interplay with politics.
- Emerging trends and dynamics of urbanization in Ethiopia.
- Tom shares details about his next upcoming project.
Tweetables:
“Given pure market incentives, firms are unlikely to invest in new industrial sectors, whether that’s copying technology from more advanced economies or investing in innovation and coming up with new products and new technologies.” — Tom Lavers [0:02:59]
“Essentially the developmental state became a label, which the Ethiopian government itself used for its development strategy, and also ultimately a political project.” — Tom Lavers [0:03:39]
“The argument of the book is ultimately this [developmental model] unravels largely around the failure of industrial production. The failure to industrialize and create sufficient jobs.” — Tom Lavers [0:08:17]
“I think it is hugely important for Ethiopia that it does have a relatively unusual history. I think at times there is a tendency to overstate how exceptional Ethiopia is within Africa.” — Tom Lavers [0:16:05]
“The reality was that the political process [in Ethiopia] overtook events to some degree. Job creation just wasn’t fast enough to fulfill the role that the government had hoped in terms of creating jobs and placating the masses when it was forced from power.” — Tom Lavers [0:35:49]
Links Mentioned in Today’s Episode:
The Global Development Institute (GDI)
Ethiopia’s Developmental State: Political Order and Distributive Crisis
Charter Cities Institute on Facebook
Transcript:
[INTRO]
Kurtis Lockhart: Welcome to the Charter Cities Podcast. I’m Kurtis Lockhart. On each episode, we invite a leading expert to discuss key trends in global development in the world of cities, including the role of charter cities and innovative governance will play in humanity’s new urban age. For more information, please follow us on social media, or visit chartercitiesinstitute.org.
[INTERVIEW]
Jeffrey Mason: I’m Jeffrey Mason, Research Manager at the Charter Cities Institute. Joining me on the podcast today is Tom Lavers. Tom is a Senior Lecturer in Politics and Development at the Global Development Institute at the University of Manchester. Tom’s research interests include the politics of social protection and labor regulation, the political economy of land, and state-society relations with a focus on Ethiopia and Rwanda. Our topic of conversation today is Tom’s impressive new book, Ethiopia’s Developmental State: Political Order and Distributive Crisis. We discuss the rise and fall of Ethiopia’s ruling political coalitions since 1991 and the government’s successes and failures at generating development. Diving into its efforts regarding land and agriculture, manufacturing, and urbanization. I hope you enjoy this episode.
Jeffrey Mason: Thanks for joining us on the show today, Tom.
Tom Lavers: Thank you. It’s a pleasure to be here. Thanks for the invitation.
Jeffrey Mason: I really enjoyed reading this work. It’s something I knew maybe a little bit about, but not really in any depth and the depth of this book into what is really the last 30, 35 years of what’s going on in Ethiopia in regards to the political economy. It’s really interesting and really impressive. Let’s define terms. What is actually a developmental state and what are the prototypical examples of such a state?
Tom Lavers: There’s what it is in the literature and there’s what it is in terms of the way that I’ve used it, which is slightly different. Developmental states literature came about largely in reference to East Asia, particularly Japan, South Korea, Taiwan, to some degree Singapore, and then another variant looking at Latin America as well. Obviously, East Asian countries have been the most successful in terms of economic growth, structural transformation over the last 70 years or so, catching up with, and in many cases surpassing previously developed countries in the West.
It was a literature essentially trying to grapple with that question of how do they do it, how are they so successful? Particularly focusing on industrialization and industrial policy. That literature, there’s a lot of variation and a lot of debates within it, but it tends to focus on how the state played a key interventionist role, so much more than just allowing markets to happen, but the argument is that the states were very important in terms of intervening in markets.
Alice Amsden used this famous phrase of intentionally getting the prices wrong, rather than allowing markets to function as they would normally, intentionally disrupting them and trying to shape the incentives for private firms, so that they did things that they wouldn’t otherwise do. Essentially, this is the argument that underpins most industrial policy that given pure market incentives, firms are unlikely to invest in new industrial sectors, whether that’s copying technology from more advanced economies or investing in innovation and coming up with new products and new technologies.
It requires state intervention to provide those incentives to overcome market failures that would otherwise mean that firms are unsure about whether they’ll have a market for the processes in industrial production that they’re investing in, whether they’ll have returns to innovation will come round or not, and will actually pay off. But that’s a whole literature around the features of the East Asian and to some degree Latin American states, which enabled this.
In the book, I put in scare quotes, because it’s essentially the developmental state became a label, which the Ethiopian government itself used for its development strategy, and also ultimately a political project, which was attempting to try and keep the Ethiopian People’s Revolutionary Democratic Front, EPRDF, Ethiopia’s full of acronyms. Unfortunately, trying to keep that party in power. Essentially, the way I use it in the book is less trying to classify Ethiopia as a developmental state. That’s not really the question I’m trying to grapple with. It’s more trying to explore the rise and fall of this developmental political project and how it used this label of the developmental state inspired to a considerable degree by Taiwan, Korea, or at least the Ethiopian government’s reading of those developmental experiences to try and bring about development and, as I say, consolidate its own political position.
Jeffrey Mason: It really is an interesting look at the whole history of a unified long period of a particular government. I think that’s really fascinating. You set up the conceptual framework for how the government in Ethiopia acted in terms of driving forward state-driven development, and how the Ethiopian experience with that, fits in relative to some of these other state-driven stories. It does a second related piece to this in the title, you describe it as a distributive crisis, which I think feeds back into this framework that you’ve established. If you could walk us through that.
Tom Lavers: Sure. I mean, I think the basic argument of the book, as I say, is trying to wrestle with the politics of the rise and fall of this particular government and its developmental projects. Essentially, the argument is that it came to power somewhat unusually, and in this respect, it shares certain features with some of the East Asian, what often get called, developmental states. Essentially, the ruling elite came to identify its own prospects of political survival with the structural transformation of the economy. That’s the political order part.
The EPRDF originated in an ethnic-based insurgency in the north of Ethiopia. They fought their way to power and essentially were – despite being militarily dominant, was facing this structural vulnerability and that they didn’t have a political base across the country. They had both elites and the general population outside of the area in the north that they’d been to — where they’d been fighting a civil war, were either skeptical or, in some cases, actively in opposition to the incoming ruling party. It was a difficult position from which to consolidate national power.
They came up with a twofold strategy for doing that, which defined their period in office and continues to define Ethiopian politics. One around how to deal with the challenge of ethnicity, which they reconstructed Ethiopia as an ethnic federal state, trying to draw around ethnic linguistic groups and provide a federal system which devolves certain responsibilities to self-administration for those regions, but the other part of it, which a lot of the book wrestles with, is the idea that they essentially were trying to build a relationship with the population and trying to incorporate them into structures which distributed resources and tied them to the regime.
Initially, they very much the focus on that was land registration, which had happened in the 1970s, state ownership of land was maintained when the government came into power and the flow of agricultural inputs, trying to raise agricultural productivity, but also distribute those through party-state structures, tying people to the incumbent regime. But a recognition ultimately that in the context of rapid population growth, agriculture was only a short-term solution for this, that ultimately, their fortunes would rest on structural transformation, creating an industrial sector which would create employment, and a rise in productivity.
In that way be able to gradually bit by bit absorb surplus labor from the rural agricultural sector into urban areas, into urban industrial employment, continuing to essentially tie that to some degree to allegiance to the regime and thereby maintaining peace and stability and the continuity of the government. As I said before, a lot of that corresponds to a certain reading and the elements of what happened in the likes of Taiwan and Korea and so on. The basic argument of the book is that that strategy provided the motivation for this development project, which delivered some really important successes.
Ethiopia from the early 2000s went off into the longest sustained period of economic growth in its history. You look at pretty much any socioeconomic indicator from health and education, poverty through to infrastructure and everything in between. They all sharply improved in that period of time and in that sense, it’s enormously impressive. But the argument of the book is ultimately this model unravels largely around the failure of industrial production. The failure to industrialize and create sufficient jobs and I will go into the reasons for that in a moment, but essentially, what this meant was that you had this rapidly growing population in Ethiopia.
Agriculture quickly was exhausted as a means of absorbing that labor. The shortage of land meant you had land holdings being divided up into ever smaller plots when once regular redistributions of land ended essentially a whole generation of young adults missed out on access to land. The government prioritized industrial policy and did many of the right things that you would hope them to do in terms of that, but it wasn’t successful ultimately.
They went through two different phases of how to try and industrialize how to create industrial employment. The first one, again, based on their reading of East Asia which was based on domestic capital trying to support domestic firms to become competitive gradually entering to global markets and compete globally which didn’t succeed for the most part with a few exceptions, but particularly attempts to enter into textiles, and leather on, were relatively limited in their success. Relatedly, the government then turned towards industrial parks and attempts to get already established big international firms to relocate production into Ethiopia.
It was successful to a certain degree. There were some big international firms relocated. It essentially came too late by that stage. There was already a very large section of the Ethiopian population which felt that it had been bypassed by the developmental successes, and didn’t really have any economic opportunities commensurate with rising education, and rising aspiration. The result was that was the key source of grievance which underpinned a whole wave of protests. That ultimately led to regime change and the unraveling of the ruling coalition.
In that sense, it’s this distributive crisis of failure to industrialize, and the failure to generate these distributive resources which would consolidate the political party in power.
Jeffrey Mason: This crisis that emerged over a number of years, how much of this would you describe as being top-down versus bottom-up in the sense of, I think what is often considered one of these inflection points after the end of Meles Zenawi’s administration, how does that factor into what happens?
Tom Lavers: Sure. I think it’s a key question. They are linked and connected in complex ways. Meles Zenawi was prime minister and the key figure within the ruling coalition ever since they came to power in 1991, through to his death in 2012. Particularly, after 2001 there was a split in the ruling party and he consolidated his power, and was the key figure, and the visionary, the architect behind of a lot of this approach. In many cases it was him reading about East Asia and trying to encourage his advisors and ministers to look into it themselves and giving his interpretation on it. Yeah. He was undoubtedly, the most powerful figure holding the ruling coalition together.
I mean, I think there were shifts within that already. So, I mean if you go back to growing People’s Liberation Front so the origin of the EPRDF fought their way to power in the 1980s and eventually took power in 1991. They formed the EPRDF which is a coalition of ethnic parties and essentially, oversaw the creation of that coalition. In some cases, incorporating already existing political parties. In some cases, essentially creating them themselves, so often from captured prisoners of war.
I mean there was always this tension within the ruling coalition of a dominant party, which had essentially mounted a nearly two-decade-long revolutionary struggle to fight their way to power, and an assortment of more ad hoc creations. There was always an imbalance there. I mean, I think by 2012 there was already some signs that the other ethnic parties were less willing to play a subservient role within that coalition, and were gradually, trying to assert themselves and challenge some elements of what the federal government was pushing on them. That undoubtedly accelerated once Meles passed away in 2012. You did start to see the beginnings of that elite fragmentation.
What I would say is between 2012 and 2014, there was an attempt to present a unified public front between all those different elements of the coalition. They united around the next leader Hailemariam Desalegn, who was chosen through the party system. Essentially, all of the outward statements were very much, “We are sticking to the path that Meles laid down.” It’s really when you started to have a social movement, what became known as the Oromo protests which began around April, March 2014, where it initially very heavily suppressed and then returned in late 2015.
It’s really those mass protests by exactly this generation that had been left out of access to land and rural areas, left out of access to urban employment. When those mass protests broke out that you started to see clear signs of fragmentation within the ruling coalition, so almost immediately you had statements from members of the other political parties, particularly the Oromo branch, expressing some support for protesters and concerns about the federal government.
As time went on, you had regime change within the leadership of the Oromo branch of the ruling party, and figures both in the Oromo and laterally in the Amhara branch of the ruling coalition came to make quite explicit statements in support of the protests and questioning the federal government, and essentially the dominance of the TPLF within it. I think there’s this element of both as time went on. That fragmentation really came to the fore of my sense is that it was at least partly prompted by the protests that as time went on the members of the ruling coalition saw value when, essentially stoking the fires of these protests that would then enhance their leverage internally within the ruling coalition and start to redress that power imbalance.
Jeffrey Mason: Compared to a lot of places in general, but especially, within Africa. Ethiopia has a pretty long history of formal statehood and in the deep roots, and other literatures. History of statehood, theoretically matters quite a bit for economic development. How do you think Ethiopia’s relatively long history of statehood impacted the government’s ability to – regardless of how successful or not they were from one piece of the program to another, but to even really be able to mount this developmental push? In the first place, on a related note in 1991, how much of this new government was building off of, let’s call it maybe a newly created blank slate versus how much are they just building on top of the old structures and apparatuses were?
Tom Lavers: I think it’s an important question. The one finding that resonates through pretty much all of the literature on states and state capacity is just how long a term process state building state formation actually is. I’ve been reading a couple of books even since I’ve finished that book which points us to several thousand years worth of fairly innocuous changes millennia or more ago in different parts of the world, particularly China, and how much that’s then influenced subsequent patterns of state formation.
Jeffrey Mason: There’s a great quote by Gordon Brown where he says, “In establishing the rule of law the first 500 years are always the hardest.”
Tom Lavers: Yes. Exactly. I think it is hugely important for Ethiopia that it does have a relatively unusual history. I think at times there is a tendency to overstate how exceptional Ethiopia is within Africa, but it certainly has an unusual history. History of hierarchical state structures which go back several hundred years at least. Depending on your interpretation, perhaps quite considerably longer than that. There is a legacy of a hierarchical state authority within Ethiopia in particularly parts of the country. It’s one of the few African countries that went through a revolution.
I think clearly, it can be classified as a social revolution, which also has had a dramatic impact on transforming what was previously the imperial states. Enhancing state capacity, and territorial control, and this autonomy of the state from social actors. All key things which ultimately would prove to be extremely important under the EPRDF in terms of its ability to actually implement its development strategy.
The legacy of that state-building process is distinctly mixed on the one hand there is this legacy of hierarchical state authority at the same time there was also a legacy of great ethnolinguistic diversity, so around the time that European powers were colonizing the majority of Africa, Ethiopia also, underwent a massive expansion of its territory from what had been an area in the north which shared strong cultural linguistic roots, suddenly expanded dramatically towards the end of the 19th century incorporating groups, which didn’t really have much in common culturally or linguistically. Which essentially, stored up many of the challenges which ultimately, were faced in terms of ethnicity and how to deal with what Ethiopia is called the national question.
It also, I think the other challenge is that, while Ethiopia had a high level of capacity in certain senses in terms of the ability to dominate society and enforce decisions, it really didn’t have much experience in terms of manufacturing technical expertise. These kinds of things. When it came to actually then launching an industrial strategy that also, became something of a problem that there wasn’t that body of expertise. I mean again, if you compare Ethiopia to East Asia, Korea was already experimenting with manufacturing under Japanese colonial rule at the early 1900s. By the time independence came after the Second World War already, had considerable levels of technical expertise to build on in terms of both developing industrial firms, but also within the state to be able to set the right policy incentives.
Ethiopia in comparison was a bit very beginning of a learning curve in that sense. So, it was a very mixed role. I mean in terms of how it compares to Africa, I mean one of the points I tried to make is just there is a tendency to write off African development as though the entire continent’s a mess in considerable chunks of the literature. The reality is that Africa is an enormous continent, a large number of countries and very diverse within them. I think Ethiopia is unusual and to some extent an extreme, but not entirely exceptional.
There are other places which have something broadly comparable history of hierarchical states which have then been transformed and built on, and Miranda sticks out in that sense of a very strong powerful state which is able to implement its decisions and doesn’t face an awful lot of opposition from society. In other cases, you have regimes which are more colonial creations where rulers went after half a century of state building, which as we said is pretty minimal in terms of the long-term histories that it takes to actually form a capable effective state.
Rulers still have to negotiate with very powerful chiefs, clan leaders, and so on. The ability for states to enforce decisions isn’t always straightforward. It can be much more problematic. So, that state capacity autonomy, the key things which are often vital for enacting a development strategy for carrying out an effective industrial policy are much more in question in many cases.
Jeffrey Mason: One of the things that you touched on earlier is that this initial keystone of the strategy, making agriculture more productive, and more commercialized. Land reform is obviously an important part of that. That’s an important part of a lot of the East Asian stories you read. Let’s say, Joe Studwell’s book for every section of the book on a different country. There’s the land reform section. It seems like there was maybe some successes, but obviously, eventually ran out of steam is just earlier about being able to absorb excess labor. What did the government try to do in regard to land and agriculture? What ended up being the limitations?
Tom Lavers: Land was initially, nationalized brought in state ownership and redistributed in 1975. So, back prior to this government under the previous DERG military regime which, essentially carried out its revolutionary project dispossessed the land of elite at that stage, overthrew the emperor. The EPRDF had carried out land reforms of its own in related areas as it was fighting against the DERG government. When it came to power, essentially accepted and maintained the existing distribution of land, and the existing system of state ownership even going to the point of writing it into the Ethiopian constitution, essentially in an attempt to stop the World Bank continually bringing up privatization of land as in a future agenda item.
The government strategy, in my reading was it probably built quite heavily on their interpretation of what happened in Taiwan, where essentially, you had land relatively evenly distributed amongst small or farmers, and the state’s attempt to raise agricultural productivity through distribution of agricultural inputs, which wouldn’t replace labor. So, things like fertilizer, improved seeds, irrigation systems, but not mechanization for the most part.
The idea is to raise the living standards of small farmers as a whole, but also ultimately to try and capture some of that increased agricultural production. The agrarian surplus, and then try and transfer that and use that to finance industrialization or the early phases of industrialization. Now, in terms of what the successes of that. I mean, I think post-civil war it was a challenging situation to try rebuild state structures and to launch a development strategy like that through the 1990s. There was subsequently a war with Eritrea over the border in the late 1990s.
For various reasons they didn’t make an awful lot of progress with that in the 1990s. It was really after that, after the party split in 2001 that the government, essentially redoubled its efforts. Really focused on implementing that strategy. So, created this massive network of agricultural extension agents who were there both to advise farmers and also oversee the distribution of improved agricultural inputs to improve access to things like improved seeds and fertilizer.
Gradually, over time that then did start to have some positive impacts. There’s been a lot of debate around agricultural statistics in Ethiopia, and quite how accurate they are, but I think most people would recognize that from the mid-2000s, there was this sharp upturn in the productivity of the main cereal crops in Ethiopia. So, to some extent that success did deliver positive outcomes for people who had land. The other part of it was, as I said earlier, that faced with growing land shortages, essentially the government came to the conclusion that couldn’t continue to redistribute land as had been done in the past. Essentially, to take account of population growth and changing household sizes.
By stopping land redistributions, they cut off access to land for what became an entire generation of young adults. So, if you had land holdings and were able to invest in agricultural production, livelihoods did improve quite considerably in that period, but equally many young adults were essentially cut off from that and had limited access to agricultural land, other than essentially waiting to inherit from their parents. A few cases being able to rent land, they became much more problematic, and essentially, that’s the roots of this divide.
Jeffrey Mason: When you say that this particular generation missed out on the spoils of land reform, roughly would you say how many people are we actually talking about here for as a share of the population?
Tom Lavers: I wouldn’t be able to put an exact figure on it. I mean it’s very difficult to get statistics on land holdings in Ethiopia, essentially no one has them as far as I’m aware. The analysis I did was drawing on some household surveys which tries to infer from those. Ethiopia, like most developing countries, has a demographic pyramid which is very broad at the bottom. Young people in general are very high proportion of the population. The young adults within that, so it creates this very large. We’re talking millions and millions of young people who are struggling to see much prospects, either in agriculture or in the urban economy to gain a livelihood. That’s the point where it becomes quite a problem and potentially quite explosive.
Jeffrey Mason: We’ll get to industry in a moment, what I’m wondering is in regards to both the land issues and the agriculture issues, as well as the industry itself. How much of an effort was there, and how successful or not was the government doing this geographically distributing these efforts among the different regions and of the different ethnic regions of the country or did things end up becoming lopsided in favor of one region over another?
Tom Lavers: This is a political hot topic, certainly whereas the EPRDF was removed from office. There’s been a common attempt to both downplay the successes of the EPRDF regime, while obviously pointing out the many failures as well, but also to claim that the entire governments had favored Tigray, throughout the EPRDF period in office. It’s very difficult to get accurate data on this. Tigray itself is relatively agriculturally unproductive for the most part, there’s certain parts which have productive areas, but much of it is not ideal places for agriculture. The main productive regions are particularly further south or a mere some parts of southern nations and parts of Amhara.
The strategy was relatively uniform at least highlands settled agricultural areas, because there’s another divide within Ethiopia between the highland regions which are dominated by settled agriculture and the more lowland parts which tend to be more pastoralist or agro-pastoralists, and some shifting cultivation and different forms of agricultural production. So, the strategy was relatively uniform in terms of the settled agricultural areas focused on promoting agricultural productivity growth amongst smallholders. Indeed, when you look at the data by region on which regions benefited the most out of that is undoubtedly Oromia, Western Oromia, Western Amhara. The most agricultural productive areas where you saw real major boosts in agricultural yield.
The other side to that is the strategy was always differentiated between the settled agricultural areas and the areas where people employed more mobile livelihoods. From the government’s perspective, Ethiopia is far from exceptional in this sense, people who move about are always problematic. From perspective of a state, you go back to James Scott’s book on, Seeing like a State. He makes this pretty clear that people who move don’t really fit with the rationale of how states are constructed and that’s certainly true in Ethiopia. The view was the settled agricultural areas fit what areas with more mobile livelihoods are much more problematic, to the extent that there’s been an entire narrative, essentially trying to delegitimize those livelihoods as productive uses of land or indeed uses of land at all throughout the EPRDF era.
There was this attempt to encourage some foreign, some domestic agriculture investors to go to the lowland areas and try, and set up large-scale agricultural investments. So, there’s a big wave of this around the 2008. Commodity boom in that period where Ethiopia, like many other countries had large numbers of foreign investors coming in the government actively promoting those taking lands and pushing pastoralists and other people into more remote locations. Now, for the most part those investments have been fairly catastrophic failures. Poorly planned. Poorly thought out, and ultimately most of them have failed and have been rolled back.
Jeffrey Mason: Now, let’s turn, instead agriculture to industry. In late discussions, and I think I’ve done some of this too. Ethiopia is lauded as having a relatively not perfect, but a relatively successful manufacturing program at least in some sectors, like textiles. The industrial parks are often talked about in well regard, Hawassa being the one that I think most people point to. Your analysis of the government industrial program is a lot more mixed. What can you tell us about what’s really going on with manufacturing and industry?
Tom Lavers: I think it’s important to know, Ethiopia went through several phases in terms of its industrial strategy as I mentioned briefly before. Initially, the assumption there wasn’t an awful lot of attention paid towards industry, even though industrialization was very much the objective from the beginning from the early 1990s. But as an explicit industrial strategy there wasn’t an awful lot of thinking about how they would do that, the idea was they would focus on agriculture. Once you’ve got agriculture booming the surplus which you’d be able to spend on industry and also, a large domestic market of farmers who would be able to buy manufactured goods. Then you would turn your efforts towards industry.
That changed around the early 2000s the recognition that they couldn’t wait around industrialization that they needed to put some effort into it at that point. At that time, they were very much focused on domestic firms, and a particular model of industrialization, which is another important theme that I tackle in the book, that when you go back to the early industrialization, industrializers from Europe, North America, and Japan, and even the likes of Korea, and Taiwan.
Industrialization happened when you had domestic firms who initially acquired technology from abroad, copied or a more advanced firms from other countries. Learned how to use that technology producing primary for the domestic market initially, gradually caught up, and then began to produce for global markets. Potentially, then advanced the technological frontier as they went and industrial policy was essentially there to facilitate the acquisition of technology and then there was productivity improvements to catch up.
The Ethiopians, their thinking was very much that Ethiopia would follow along those lines, based on this reading of East Asian development. So, there was an attempt to promote industrialization through a range of some independent firms, some party-affiliated firms, some state-owned enterprises. The reality was, that wasn’t terribly successful. I think there is a number of different reasons for that. A lot of it comes down to the changing nature of the global economy that in the period since Korea. I mean to some degree of the early signs of it would happen when Korea was industrializing, but in the period since, particularly really accelerated this fragmentation into global value chain where the entire value chain of a product is no longer within one single country.
Products that you go to shops and buy, made in lots of different places. You got a company which might be headquartered in the US or Europe or wherever it may be, but the production process is distributed all around the globe and assembled in different places from where individual components might be built. That has a number of different implications for industrial production and particularly for countries taking the first steps towards industrial production. So, Ethiopia is concentrated initially on industries with the lowest levels of productivity. Things like textiles and apparel, leather, and leather processing into shoes, and hair, and gloves, and so on. Sugar cane being turned into sugar. Few other industries.
The reality is that if you take the textile sector, Ethiopia’s forays into the textiles, the apparel sector is essentially controlled by a relatively small number of global producers, who resource products globally and control the production process. What Ethiopia’s opportunities to enter into that, like many other low-income countries, are very much at the lowest end. It’s the lowest productivity, least complex, but also least remunerative parts of the value chain which get outsourced, which provides their opportunities. Even more than that. It’s very difficult as a new producer to break into those global value chains, and for domestic firms, there is such an intense level of global production, but alongside exacting production standards that’s very difficult for new firms to break in, and to consolidate a foothold within that industry.
Even if they do, it doesn’t necessarily provide much in the way of opportunities to move up the value chain into the higher value-added sections of the global value chain. In this sense, I’m building on quite a lot of others’ work, who have done more work on industrial policy than myself, that people like Lindsay Whitfield and Deborah Brautigam. I believe one of your former podcasts and several others, who’ve done some really detailed studies of different industrial sectors which I then build on, and I guess look at the political implications of this.
The challenge was, essentially, Ethiopian firms struggled to break into global value chains within these sectors, and even when they did struggle to deliver on the contracts that they’d signed. By over early 2010, around the time Meles passed away, you had this shift in development strategy where the government came to the conclusion that industrialization wasn’t moving fast enough. After Meles, I think it was probably more openness within the political leadership towards foreign investment and the private sector, which the government had been slightly hesitant about in the past.
At that stage they came to the conclusion that industrial parks was the way to go. So, rather than the state trying to cultivate domestic capitalists, the idea was the state then overseas construction of industrial parks which provide the infrastructure for industrial production, but you then try and convince already established global firms to relocate production to Ethiopia. A very different model of industrialization. So, it’s essentially at that point it becomes contingent on securing enough foreign investment into the country is the key challenge in terms of industrialization.
They did manage to get some apparel producers to relocate productions, some shoe companies to relocate production to Ethiopia, and the successes that they later had in terms of industrialization. At that point there were some important successes. I think there was a moment where it seemed like Ethiopia might be on a really positive tract in terms of becoming the next center of relatively low-wage manufacturing for the global economy on that basis.
The reality was that the political process overtook events to some degree. Job creation just wasn’t fast enough to fulfill the role that the government had hoped in terms of creating jobs and placating the masses when it was forced from power. Political instability essentially became a major deterrent to that foreign investment which obviously both protest movements, suppression of the protests, and then subsequently civil war has been a major deterrent to that foreign investment and impeded progress in terms of industrialization.
Jeffrey Mason: I’m curious to see in the next few years, how much of a return to trend line there can be in terms of manufacturing and other investment? The one topic that’s historically always been very related to industrialization that’s really relevant to CCI is urbanization, and there’s this literature about urbanization with and without industrialization, and how for lots of places, US, Europe, some parts of Asia, elsewhere.
Historically, urbanization and industrialization have gone hand in hand, but since the 1970s this has broken down in Africa and some other places. I think in discussions in Africa-focused research and policy circles, when we talk about urban issues I think not always, but oftentimes Ethiopia tends to be ignored a little bit in those discussions versus some of the countries that are more urbanized that have some of the megacities of the continent which Ethiopia lacks.
You talk in the book about how the government had a strategy that was related to its other economic strategies about urbanization, but that this was really one of its maybe more poignant failures. So, can you talk about what the government tried to do with regard to urbanization and how it related to the other pieces of their strategy, and why it failed.
Tom Lavers: It was a key concern from very early on. I mean, I think the government’s concern expressed back in the 1990s was the population growth would mean that you would have a generation of people without livelihoods, which would cause unrest. But it was more particularly around urbanization. They recognized that the agricultural sector would only be able to provide livelihoods for the Ethiopian population for a certain amount of time that, ultimately people would move to cities.
It becomes particularly, problematic if you’ve got large numbers of unemployed people in urban areas, and that’s where it’s most likely to lead to political instability. So, the initial strategy was very much to try and keep people in rural areas, so they were very resistant to migration and took a range of measures to try and slow the pace and migration. In the early years, ultimately came to the conclusion that it wasn’t going to be possible to stop it entirely, that you had to industrialize, you had to create employment, and try and accelerate that process and work with it.
The government strategy was very much that they wanted Ethiopia to industrialize and urbanize at the same time. So, essentially to buck the trend of many African countries where, as you say there has been urbanization without industrialization. Ultimately, industrial failures and the inability to create vast numbers of jobs for the very rapidly growing population meant that in that sense Ethiopia isn’t terribly exceptional. It’s relatively under-urbanized compared to much of the rest of the African continent, partly because of the attempts of governments to try and slow the pace of urbanization, is very rapidly urbanizing both Addis and particularly, the cities outside Addis are growing very, very rapidly.
The attempts to slow that pace of urbanization unraveled early on, essentially the government then had to reckon with how to manage that process of urbanization to try and retain political stability in urban areas, whilst trying to create jobs for people in those urban settings and clearly that’s been particularly problematic both in terms of urban job creation, but also managing the process of urban expansion. I mean that was ultimately the flashpoint for the protest movement that began in 2014, was the expansion of Addis Ababa, which has I guess, two distinct elements to it.
One is around the expropriation of rural landholders to make way for the city where, essentially the government’s key pillar of its developmental state strategy was the use of state ownership to expropriate landholders for relatively low compensation payments and use that as a means of subsidizing infrastructural developments, industrial development, the housing development, whatever it would be essentially by obtaining cheap land. Obviously, that creates considerable resentment for those that are expropriated then that overlayered Addis Ababa on very particular ethnic politics around — Addis Ababa is a multi-ethnic city, stuck right in the middle of Oromia.
Addis Ababa grew to the boundaries of the city administration which were created in the 1990s, and quickly started sprawling out beyond. So, essentially that means the expansion of a multi-ethnic city at the expense of Oromia farmers in the surrounding area, which became politically explosive and tied up with broader politicization of ethnicity within Ethiopia and sparked these protests in the first place.
Jeffrey Mason: As Ethiopia moves from being one of the most rural to more urban, I think this evolution will be really interesting to follow moving forward. I would also, for folks who are specifically interested in urbanization in Ethiopia, some of our friends over at the Marron Institute at NYU have done some really great work on urban expansion in Ethiopia that I would recommend you check out. I think that’s going to wrap it for us today Tom, but before we go, this is a really huge really impressive work. What are you working on next? If you know.
Tom Lavers: Thank you, so much. There is another book in the works, which hopefully should be out in 2024, which is in some ways a companion to this book. It’s actually on the political history of dam building in Ethiopia, as you may be aware that Ethiopia is in the midst of final stages of constructing the Ground Ethiopian Renaissance Dam on the Nile. This book basically, looks back at the history of dam building from the Imperial era, but then particularly again, during the EPRDF era, where the Renaissance dam, obviously has attracted an enormous amount of tension and attention.
There’s been a whole series of dams built across Ethiopia, building up to that. So, it examines the political dynamics both domestically and internationally which have ultimately led to the construction of the Renaissance Dam. So, that’s the next in the works. We’ll see what follows on after that.
Jeffrey Mason: That sounds really fascinating. I can’t wait to read that one when it comes out.
Tom Lavers: Great. Thanks so much for the invitation and the chance to talk through this. It’s been great.
Jeffrey Mason: Thanks for joining, Tom.
Tom Lavers: Pleasure.
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Kurtis Lockhart: Thanks so much for listening. We love engaging with our listeners, so please always feel free to reach out. Contact information is listed in the show notes. To find out more about the work of the Charter Cities Institute, please follow us on social media, or visit chartercitiesinstitute.org.
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