Pathway to prosperity: Ethiopia case study


This report from UK think tank the Legatum Institute looks at Ethiopia’s performance on openness to trade, investment, ideas, competition, and talent.

This Ethiopia case study is one of a number of in-depth reports which analyse an individual country’s performance on the key characteristics of openness to trade, investment, ideas, competition, and talent. Our report highlights that Ethiopia is at a pivotal moment in its history. With a more open and inclusive economy and a stable political settlement, our report emphasises how over the coming decades, sustainable economic growth can take Ethiopia on a path to a solid upper middle-income status. In particular, our report emphasises how achieving greater levels of prosperity will require a more democratic political settlement, as well as the different regions and the centre working together for common interests and objectives. Moreover, a ‘merit-based’ civil service is needed – focusing on the needs of the citizen; as well as a truly competent and independent judiciary; and a new civil service ethos that demonstrates a commitment to service and empathy and zero-tolerance for corruption, embraces transparency and brings public services closer to all Ethiopians, for example, through digitalisation. With the Government committed to more privatisation as the country charts its way towards prosperity, and ministers clearly understanding the need to shift the direction of capital away from the state and towards private markets, it is vital that Ethiopia also shifts its broader regulatory order to accommodate an embracing of private enterprise and capital. The report therefore recommends putting the private sector in the driving seat, moving away from a heavily state-led and controlled economy in order to create an environment where enterprise can flourish. However, the report cautions that whilst the Government has committed to a privatisation process it is important that this is carried out when the judiciary and the rule of law systems in the country have been strengthened, to avoid the risks of corruption in these processes, as experienced in other countries.

This Ethiopia case study is one of a number of in-depth reports which analyse an individual country’s performance on the key characteristics of openness to trade, investment, ideas, competition, and talent. Our report highlights that Ethiopia is at a pivotal moment in its history. With a more open and inclusive economy and a stable political settlement, our report emphasises how over the coming decades, sustainable economic growth can take Ethiopia on a path to a solid upper middle-income status. In particular, our report emphasises how achieving greater levels of prosperity will require a more democratic political settlement, as well as the different regions and the centre working together for common interests and objectives. Moreover, a ‘merit-based’ civil service is needed – focusing on the needs of the citizen; as well as a truly competent and independent judiciary; and a new civil service ethos that demonstrates a commitment to service and empathy and zero-tolerance for corruption, embraces transparency and brings public services closer to all Ethiopians, for example, through digitalisation. With the Government committed to more privatisation as the country charts its way towards prosperity, and ministers clearly understanding the need to shift the direction of capital away from the state and towards private markets, it is vital that Ethiopia also shifts its broader regulatory order to accommodate an embracing of private enterprise and capital. The report therefore recommends putting the private sector in the driving seat, moving away from a heavily state-led and controlled economy in order to create an environment where enterprise can flourish. However, the report cautions that whilst the Government has committed to a privatisation process it is important that this is carried out when the judiciary and the rule of law systems in the country have been strengthened, to avoid the risks of corruption in these processes, as experienced in other countries.

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