...AID AND THE DUTCH-DISEASE IN ETHIOPIA Monetary Policy and Economic Research Directorate National Bank of Ethiopia Teferi Mequaninte tefmeq@yahoo.com May, 2005 SECTION ONE Introduction Following the introduction of the Structural adjustment program (SAP) in 1992 to the Ethiopian economy, there was a massive inflow of foreign aid in the form of grants, concessional loans and technical assistance. Net aid1 inflows to Ethiopia during the Derg period were around 7 percent of GDP and are doubled to 14 percent of GDP during the EPRDF regime. These elevated flows have raised a number of concerns, ranging from fears about the effect of aid inflows on the real exchange rate and export performance. The source of anxiety for all this is the Dutch disease problem of foreign aid. While seemingly beneficial foreign aid inflows may generate undesirable effects in the economy. These undesirable effects include a decline in export performance and manufacturing production caused by appreciation of the real exchange rate and resources moving out of manufacturing into other sectors (Timothy,1997). There are also concerns about aid sustainability. Specifically, while LDCs have been forced to take on greater burden of global adjustment, most donor countries have been unwilling to expand financial support for adjustment in the LDCs (Bigsten, 2003). These could be due to different motives by the donor countries. Instead of addressing the most developmental constraints...
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...shortage. For the purpose of combating hunger, global food security actors have made much effort. International organizations, such as Food and Agriculture Organization, World Food Program, and countries both play a vital role in helping Africa counter with starvation. Food aid is the crucial way they used to help food deficit countries. US, European Union and China are the main food aid donors. Among recipient countries, Ethiopia almost receives the most food aid (Mousseau, 2005:14). However, instead of making progress, data shows that the situation in Ethiopia is getting worse (Devereux, 2000:9). With the continual food aid, it seems that Ethiopia gradually falls into the vicious circle and depends on food aid rather than develop domestic agriculture to eliminate hunger. Hence, Ethiopia is an important case study for the food aid in Africa. The case of Ethiopia is of great importance for understanding the importance of food security in international politics and identifying problems of food aid. This is necessary for both individuals and independent state to achieve food security. For individuals, access to sufficient amount of food is the fundamental human rights. For countries, if they rely on foreign countries to meet the domestic food demand, they will lose the food sovereignty (Singer, 1988:80). The country without food sovereignty can be seen as democratic deficit, because citizens are lacking of the rights to decide their own policies which have...
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...(Akhgar, 2013 p.42). The failed US attack on an al-Shabaab Barawe stronghold and al-Shabaab’s subsequent deployment of beach defences are demonstrative of the advantages of operating out of al-Shabaab controlled ports and evidence of al-Shabaab’s ability to withstand attacks by foreign forces (Ahmed et al., 2013). When meeting with the pirates, al-Shabaab could ask for control of the AusAID/WFP food shipment and future pirate food hauls. Over 3 million people are reliant on aid in Somalia (Atwan, p.118) and the food could be used to restore Somali faith in al-Shabaab, lost after recent al-Shabaab attacks. Food supplies could provide incentive for recruitment to the al-Shabaab cause if distributed in Somalia, or in the Somali populated areas of Kenya and Ethiopia. Al-Shabaab would not meet with aid agencies such as the WFP. The WFP was ‘banned’ in 2009 as a result of negligent practices, where the flooding of food aid negated the Somali farmers’ opportunities to sell their harvest and ability to independently feed and establish themselves economically. Furthermore, al-Shabaab’s position towards aid agencies has been hostile since 2011 when it established the Office for Supervising the Affairs of Foreign Agencies and ‘banned’...
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...famine and dying from it. One country in particular stands above all the rest looking back in history. Ethiopia, formerly known as Abyssinia in 3000 BC, when it became the first African nation, has hit its bottom and cannot get any worse. Famine, hunger, fear, and hopelessness are all emotions running through the average Ethiopian. The latest string of famine to strike was not to long ago. From 1983 to 1986, nearly 1.5 million Ethiopians died of starvation. That was the culmination of nearly two decades of famine that claimed more than seven million lives. Ethiopia was not the only African country to suffer from famine during these two decades. From around 1970 to 1987, all of northeastern Africa had gone through periods of drought. In the neighboring countries of Ethiopia, many other millions of lives were claimed, including the countries of Sudan, Chad, Yemen, and Somalia. Fortunately during this period of time, in these countries, farmers were able to produce enough crops to relieve some of the hunger and starvation. Everything in their power was done to help save the lives of others, and they even stored grain in case of future droughts. In Ethiopia, many other factors prevented the people from preparing for the unavoidable droughts. Many factors worked together with the drought conditions to make the situation even worse. As a result, Ethiopia did not just experience periods of famine between 1970 and 1987 like its neighbors, but instead it suffered...
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...it was handed over to Ethiopia. Ever since then Eritrea has been battling many challenging issues. Transition: One of these challenges is its relations with the United States. Body: Main Point 1: US Relations/ Interest a. War on Terror / cooperation with Its relationship with the US is complicated. Up until 2005 the US sent around $60mil a year in assistance to Eritrea until the government told USAID to leave. Eritrea’s location near Somali and Sudan makes it a key ally in the war on terror. However, b. Possible rouge state designation / lack of cooperation Recently relations have worsened since an exiled Somali Islamist leader with ties to Al Qaeda was reported to be in the country conducting a conference in the capital city of Asmara. This resulted in the United States to threaten to add Eritrea to the rogue states list with Cuba, Iran, Sudan, Syria, and North Korea. This would have lead to crippling sanctions. Eritrea’s cooperation with Somali rebels has continued to be an issue with not only the US but most of the rest of the world. Transition: As bad as its relationship with the US is Eritrea’s relationship with its neighbors is much worse and has a very negative impact on the rest of the country. Main Point 2: National Considerations a. Relations with neighbors / Sudan/ Ethiopia Eritrea has been in a state of war in some way or another with one or more of its neighbors since its independence. It has fought with Sudan, Yemen, Ethiopia, and most recently Djibouti...
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...Ethiopia`s development from famine to economic growth The classic theory of modernization has its origins in the 1950`s, a post-war period which challenged strategists to investigate the problems faced by the underdeveloped countries, in their attempt to provide aid programs and technological assistance and promote long-term economic growth and political stability. Typical traditional societies were analyzed in the processes through which they should develop into modern social structures by following an unidirectional path similar to the ones already tested by the Western societies. Several factors that contribute to the development of a modern society (including technological, economic, social, political, military and cultural innovations) were illustrated in many studies of this theory. The complexity of outcomes was generally overlooked, making necessary more than just the classic theory for a proper analysis of a country`s modernization. Thus, the Harvard Project, the most relevant study on the social and cultural aspects of development, emphasized that an ideal model can`t be defined, as the modern personality corresponds more to a desirable plan of modern society than to the contradictory nature of modern reality. Therefore, I will further seek to determine Ethiopia`s (one of the countries severely affected by famine for the last years) development in its process of modernization. Ethiopia has been plagued by famine going back to the 16th century. While climatic conditions...
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...It is absolutely difficult for any private company to compete with EFFORT in Ethiopia. TPLF have eliminated all the fair competition channels, for example, while companies struggle with import, export and revenue tax, companies under EFFORT are barely expected to pay any tax. In addition, products and services provided by EFFORT will have a special privilege in any public procurement process. For example, while Ethiopia has several Cement Factories, Mesobo Cement Factory PLC seems to be the dominant provider, if not the only provider, for Ethiopia’s mega construction projects. In his book called “Yemeles Likakit”, Mr Ermias Legesse reveals that EFFORT’s multi billion Loan from public bank left...
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...President Siad Barre was overthrown in 1991. Years of fighting between rival warlords and an inability to deal with famine and disease have led to the deaths of up to one million people. Comprised of a former British protectorate and an Italian colony, Somalia was created in 1960 when the two territories merged. Since then its development has been slow. Relations with neighbours have been soured by its territorial claims on Somali-inhabited areas of Ethiopia, Kenya and Djibouti. In 1970 Mr Barre proclaimed a socialist state, paving the way for close relations with the USSR. In 1977, with the help of Soviet arms, Somalia attempted to seize the Ogaden region of Ethiopia, but was defeated thanks to Soviet and Cuban backing for Ethiopia, which had turned Marxist. In 1991 President Barre was overthrown by opposing clans. But they failed to agree on a replacement and plunged the country into lawlessness and clan warfare. Continue reading the main story At a glance * Scene of Africa's worst humanitarian crisis: aid agencies warn that millions face starvation * No effective government since 1991 * Islamist militia and UN-backed transitional government compete for control of country * The self-proclaimed state of Somaliland and the region of Puntland run their own affairs Country profiles compiled by BBC Monitoring In 2000 clan elders and other senior figures appointed Abdulkassim Salat Hassan president at a conference in Djibouti. A transitional government...
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...Ethiopia Name Course Tutor Date Ethiopia’s profile Colonial History and Current Political Context Capital City Addis Ababa Colonial History Ethiopia is among the first independent African republics. In 1935, during the Fascist rule of Benito Mussolini, the Italians invaded Ethiopia. At the time, Ethiopia had a traditional polity comprising a feudal political system. In rebellion to the Italian occupation, Ethiopians engaged in a multi-dimensional ‘patriotic resistance’ in efforts to banish the invaders from their country. The Patriots (Arbegnoch) fought against many odds, such as the indifferences from the West and the League of Nations to establish the indigenous resistance movement. The resistance lasted for five years while Haile Selassie, the then Ethiopian Emperor, took part in an ineffective diplomatic struggle during his period in exile. Under the leadership of Haile Selassie Italians were defeated and withdrew from Ethiopia and as a result, Ethiopia became a sovereign nation (Berhe, 2008, p. 2). Present Leader Mulatu Teshome Current Political Context: In August 2012, Hailemariam Dessalegn was appointed the successor of the Ethiopia’s Prime Minister, Meles Zenawi, representing a historical moment in the nation’s politics. Ethiopia embarked on a constitutional and peaceful transition of power for the first time in her contemporary history. During the 20th century, the country was predominantly under regimes of highly centralized governments...
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...Projection 14 Analysis of various factors 17 Inflation 17 Interest Rates 17 Exports and Imports 18 Trend Analysis 18 4. Conclusion 19 5. References 20 1. Introduction to Ethiopia’s Economy Ethiopian economy is mainly based on agriculture sector, which accounts for 46% of the GDP and 85% of the total employment. Coffee has been a major crop which also mainly contributes to Ethiopia’s exports to the other countries. Ineffective cultivation practices and inadequate rainfall are the major deterrents to the agricultural sector. But recent joint efforts by the Ethiopia Government and aid agencies are helping to upgrade the traditional agricultural practices. This has significantly contribution to the reduction in number of Ethiopians suffering from starvation. The sectors of banking which comprises Insurance and Micro-credit industries are not open to foreign investors, though Ethiopia had huge inflows of investment in other commercial agricultural sectors like leather and textile. The graph shows Ethiopian economy’s sector-wise performance from the year 2004 to 2010. The agricultural sector has seen constant decline from 65% to 30% chiefly due to minimal rainfall. Soil is not fertile for the harvesting, so the crops were not growing properly. In industry sector emerging as it can be seen from growth up to 60% in 2010 as compare to 20% in 2004. The service sector has shown no sign of improvement as it remains constant at 10%. The Ethiopian constitution grants...
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...1 PED401. Applications and Cases in International Development Teaching Notes 1 The Big Push: what does it mean, and does it make sense for Ethiopia? The idea of the Big Push is one of the earliest in development economics, coined by Rosenstein-Rodan over 60 years ago in the context of a classic work on “the problem of industrialization of eastern and south-eastern Europe”. The core argument is that coordination problems, in the context of increasing returns, create the possibility of multiple equilibria. A poor country can be caught in a low-equilibrium “poverty trap”, government intervention can potentially solve the coordination problem, and “push” the economic into the better equilibrium allowing a “take-off” into sustained growth. The Big Push idea has returned to the center of development policy in the recent past. William Easterly (2006) described 2005 as the Year of the Big Push. It has done so in particular in the context of debates over Africa: the compelling normative case to transform development possibilities of Africans, has been associated with renewed emphasis on the positive case for a Big Push. This has been linked to the case for a major expansion in aid, notably in the work of the Commission for Africa and the Millennium Development Goals; Jeffrey Sachs has been a vigorous exponent of this linkage. This case concerns the analytics of the Big Push, the evidence and its applicability to a poor African country. It bridges issues of growth (from macro)...
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...Effects of War and Peace on Foreign Aid Louis Kerry Holmes Jr. Strayer University SOC 300 Professor Terry C. October 31, 2014 The Effects of War and Peace on Foreign Aid War comes with many costs, and Foreign Aid is one among the many. In fact, there has been many cases the biggest that a nation had to pay. In International relations, overseas aid or foreign aid being used in the form of a voluntary transfer of resources from a developed country, such as the United States of America to developing nation like Bangladesh or India. A part of the objective behind this act of giving is often Humanitarianism and altruism. Humanitarianism meaning the ethic of kindness, Benevolence and sympathy extended universally and impartially to all human being for welfare of humanity. Similarly altruism stands for selflessness, a concern for the welfare of others: These aids have other functions too. It may be given as a signal of diplomatic approval, or to strengthen a military ally, to reward a government for behavior desired by the donor, to extend the donor's cultural influence, to provide infrastructure needed by the donor for resource extraction from the recipient country, or to gain other kinds of commercial access. There are all kinds of aid: Emergency aid, development aid, official development Assistance or ODA, private giving, cash aid, in-kind aid, air priorities, logistics, etc. In developing countries like India and Bangladesh, foreign aid has played a very important...
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...Somalia by recruiting, at times forcibly, regional sub-clans and their militias, using guerrilla asymmetrical warfare and terrorist tactics against the TFG of Somalia and its allies, African Union (AU) peacekeepers, and Nongovernmental aid Organizations (NGO). Traditional warfare should not be considered an option as the threat faced does not constitute a conventional war where military forces are attempting to achieve strategic objectives against a recognized state. Commensurate to the threat, an Islamic extremist organization, irregular warfare strategies and capabilities are ideal in neutralizing these threats. The U.S., in support of the AU, is uniquely positioned to provide support through irregular warfare capabilities implemented by U.S. Africa Command (AFRICOM). Although the Al Shabaab organization could be categorized as aninsurgency, it may not necessarily be feasible to approach the threatwith a counterinsurgency strategy. The organization does not appearto have the support of the people as much as commanding obedience through fear. It is assessed a more viable approach through counter terrorism and foreign internal defense is necessary to minimize U.S. troop presence and bolster the relationships and credibility of AU partners. Ethiopia and Kenya border Somalia and have the most to gain and/or lose as a result of this issue. Whether it is an influx of refugees...
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...CHAPTER ONE INTRODUCTION 1.1. Background of the Study In Ethiopia, all Non-Government Organizations (NGO’s) have to make strategic choices regarding their resources by identifying priority activities, donor’s interest & Government and Charities and Societies (ChSA) reporting requirement. Even within the Civil Society Organization (CSO) itself, the different departments compete for resources with maximum approved ceilings and having in place a good financial management system is expected to provide needed tools in order to make timely decisions on fund allocation as well as monitoring performance that adhere to the reporting requirements set by Donors and Government. The financial processes of recording, planning, monitoring and controlling have to be done on an ongoing basis in conjunction with other functions of the organization for maximum impact to achieve the objectives of the organization. With the increase in the number of CSO’s operating in Ethiopia and to address the need for a regulatory body, in 2009 the Ethiopia Government issued Proclamation No. 621/2009. This proclamation provides procedures for the Registration and Regulation of Charities and Societies there by establishing Charities and Societies Agency (ChSA) under the Ministry of Justice. Then Regulation No.168/2009 was issued by the...
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...A GLOBAL / COUNTRY STUDY AND REPORT ON ETHIOPIA MBA SEMESTER-IV [Batch: 2011-13] SABAR INSTITUTE OF MANAGEMENT (751) Affiliated to Gujarat Technological University Ahmedabad 1 Index Topic Page No. Part-1: Macro Analysis of Germany (Sem-III) Country Profile 3 Industries 6 PESTEL Analysis 7 Part-2 Industry Study(Sem-IV) Pharmaceutical Industry 39 Shipping Industry 46 Agriculture Industry 52 Insurance Industry 60 Leather Industry 64 Telecommunication Industry 68 Ceramic Industry 75 2 Part-1: Overview of Ethiopia Ethiopia is located in the Horn of Africa. It‘s proximity to the Middle East and Europe, together with its easy access to the major ports of the region, enhances its international trade. Ethiopia is boarded by the Sudan on the west, Somalia and Djibouti on the east, Eritrea on the north and Kenya on the South. The diverse topography of the country generally features rugged mountains, flat-topped plateaus, deep river canyons, rolling plains and lowlands. Ethiopia adopted a new constitution that established the Federal Democratic Republic of Ethiopia (FDRE) in 1995. The federal government is responsible for national defense, foreign relations and general policy of common interest and benefits. The federal state comprises nine autonomous states vested with power for self-determination. The federal state is headed by a constitution president and the federal government by an...
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