This paper analyzes the impacts of public investment in small-scale irrigation and
farmer training on growth and agriculture-led development, on food security, and on poverty in
Ethiopia. We use a dynamic Computable General Equilibrium (CGE) model linked to a
microsimulation model based on the latest household income and expenditure survey, in a topdown
approach. All public investments are assumed to increase total factor productivity through
increased supply of skilled labor and/or irrigated land. We find that investing in farmer training
alone has great potential to increase growth, food security and poverty reduction, given that the
economy is labor-intensive. Investing in training combined with irrigation has even greater impacts.
An irrigation only approach will not yield the expected results if agricultural labor does not have
the required skills. The irrigated agriculture sector has great potential despite its small size.
However, for the impact to be notable, important investments are required in the first place to
increase the share of irrigated agriculture versus the rain-fed. An agriculture-led development is less
likely to occur because: i) of weak forward and backward production linkages between agriculture
and manufacturing sectors; ii) a significant share of manufacturing inputs is imported; iii) the
resulting contraction in private investment which restrains expansion of the manufacturing.