Ethiopia’s Imperfect Growth Miracle

Shimelse Ali INTERNATIONAL ECONOMIC BULLETIN, OCTOBER 20, 2011Ethiopia―Africa’s sixth-largest economy and second-most populous nation, home to 90 million people―has recently attracted global attention because of its double-digit economic growth. According to the Economist, Ethiopia was one of the world’s five fastest-growing economies in 2010. Despite the country’s remarkable growth performance in recent years, however, its record in promoting socio-economic development is mixed. Ethiopia has made significant strides in reducing rural poverty, improving life expectancy, and raising education levels. But these gains have come with rising urban income inequality and surging inflation. It is also not clear whether the services sector, which has accounted for nearly half of GDP growth since 2004, can continue to serve as an economic engine.