external influence in the making of development ... - FES Ethiopia

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in place in different areas of the economy and the market mechanism was made ineffective. Moreover, central planning was exercised with little incentive left at local level for crafting own agenda and strategies. No wonder, therefore, welfare situation continuously deteriorated during this period. The Derge regime was finally overthrown by the current government in 1991. Whereas important changes with respect to economic management, political administration and governance were made beginning in 1992 by the new government, an economic dynamism that is long sought is not yet achieved. So, Ethiopia’s position compared to the status achieved forty years ago is still worse in many key areas as shown in the table below: Ethiopia’s Selected Key Indicators N0. Indicators 40 years ago Now 1 Per capita income (in Birr) 249.3 252.4 2 %age contribution of Agriculture to GDP 39.4 4 Size of Loan 371 million USD 4.5 billion 5 Loan as proportion of GDP 14 percent 91.3 percent 6 External finance as proportion of total budget 35 7 Proportion of population affected by drought 8.5 21 The diagram below beautifully captures the trend in wellbeing that is witnessed in Ethiopia over the past four decades. Birr 210 190 170 150 130 110 90 70 50 1960/61 1962/63 1964/65 1966/67 1968/69 Trends in Per capita Income in the Agricultural Sector 1970/71 1972/73 1974/75 1976/77 1978/79 1980/81 6 1982/83 Year 1984/85 1986/87 1988/89 1990/91 1992/93 1994/95 1996/97 1998/99 2000/01 2002/03
Since 1991, Ethiopia mainly followed and implemented economic reform programs championed by the World Bank and the IMF. Unfortunately, the free market economy championed by the capitalist ideology and which has been under implementation for the last decade or so under the current government has also failed to take root. As will be discussed in later sections, the performance of the economy in recent years has been very dissatisfactory leading to deteriorating welfare conditions as confirmed during the PRSP consultation and escalating size of drought victims. There is now general consensus that structural adjustment programs have failed to bring the promised results (in terms of generating economic growth and poverty reduction) in a number of African countries. Some of the reasons why Structural Adjustment Program has generally failed include: 1. The Program is characterized by “Top down” conditionalities, which are driven by Washington Consensus; 2. There has been no “ownership” by countries implementing the program; 3. “Wrong economic fundamentals” that explain more how current highly developed economic systems work as opposed to how poor economies can revive and initiate a dynamic process from within; 4. The Program has failed to appreciate and take into account “ institutional” factors Ethiopia’s experience with the WB/ IMF resembles what is witnessed in other poor countries but with its own specific features and characteristics. These are discussed in some detail in subsequent sections. Generally, the market-led model of development, now dominant in the DC, has not been, so far, successfully applied in the developing world. 7
Page 1 and 2: EXTERNAL INFLUENCE IN THE MAKING OF
Page 3 and 4: Hence, developing countries are dou
Page 5: other goals may include advancing t
Page 9 and 10: WIDER (2004), total official develo
Page 11 and 12: The end of the Cold War removed the
Page 13 and 14: Aid (grant) Data on aid flows is in
Page 15 and 16: FDI flow to Ethiopia Year FDI Inflo
Page 17 and 18: 4. Ethiopia's Dependence on Aid Eth
Page 19 and 20: Source of Aid Ethiopia receives a f
Page 21 and 22: Dependence on Aid could stifle inte
Page 23 and 24: Aid conditionalities Aid is expecte
Page 25 and 26: South conflict, but a fundamental s
Page 27 and 28: such as the World Bank and Internat
Page 29 and 30: higher, plateau level. The large in
Page 31 and 32: Conclusion Ethiopia has been quite
Page 33: References Abebe Taddesse, (2004):

external influence in the making of development ... - FES Ethiopia

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