This paper attempts to unravel the factors behind the growth performance in
Ethiopia. This is done first by attempting to place growth in Ethiopia in its political
economy and historical context. This historical review helped to categorize the growth
experience of the last four decade into three regimes. This is followed by an attempt to
characterize the growth record in the past four decades, outlining the most important
episodes of growth in each sub-period. We dealt with issues of growth accounting and
structural change and discussed their implications. An attempt to understand the
source of growth using information form cross-country growth regression is also made.
The Growth performance in the three periods is then examined by analyzing the role
of institutions, microeconomic level agents behavior as well as the nature of product
and factor markets. The main conclusions that emerged from this analysis are:
Growth performance in Ethiopia is largely determined by political economy factors,
vagaries of nature; strength and efficiency of institution, efficacy of public policies, and
risk related to war and property ownership. Product and input markets are found to
be not only thin but also inflexible. This combined with unstable political
environment has greatly limited the potential growth in general and its sustainability
in particular. Had it not been for continuity and steadfastness of some of the
institutions that resulted from the long and unique history of the country, the growth
record would have been much more saddening than the current one.