p2 - ETHIOPIA CASE STUDY

overview of economic development

• categorised as an LIDC

• LANDLOCKED country which hinders trade via the ocean

• causes conflicts with neighboring countries over ownership and access to the coast

• less economic opportunity for selling their goods as exports or gaining goods as imports

• GNI per capita - $1020

ROSTOWS MODEL

• Rostow’s model predicts how a country’s level of economic development changes over time and the stages it will pass through as it develops

• country’s economy changes from relying most on primary industry (e.g. agriculture), through secondary industry (e.g. manufacturing goods) to tertiary and quaternary industry (e.g. services and research)

• Stage 1 (the traditional society) is the lowest level of development and stage 5 (high mass consumption) is the highest level

ROSTOWS MODEL ETHIOPIA

• Ethiopia is currently at Stage 2 – because its still reliant on primary products (coffee), still in a trade deficit .

• STEPS TOWARD STAGE 3: There is more manufacturing as a result of its ‘growth and transformation plan’ in 2010 meaning economy it’s gradually rising

• However Ethiopia still remains food deficient

• despite an increase in agricultural production

• there is still limited free speech which means Ethiopia runs risk of moving backwards if things don’t improve

MILLENIUM GOALS

world leaders from 189 countries agreed and signed the Millennium Development Goals (MDGs) aimed at cutting world poverty in half by 2015.

•There were 8 main goals with specific targets.

MILLENIUM GOALS ETHIOPIA

Eradicate extreme poverty and hunger

• Population living in poverty dropped from 49% to 29%

• Unemployment is still high

• WHICH MEANS 40% of children are still malnourished.

• AND 28% of the population still have insufficient access to food.

Achieve universal primary education

• NEARLY SUCCESSFUL 96% of children are now enrolled in primary education

• HOWEVER Literacy rate is still very low at 36%

• AND there are still more males than females in schools and very few females in secondary school.

• 57% BOYS 43% GIRLS

ETHIOPIAS TRADE

• Ethiopia has a trade deficit because the goods they are exporting are worth less than the goods they are importing

TOP EXPORTS: (all from the primary sector)

• coffee (28%)

• flowers grown in highlands (7%)

• livestock (over 170 million animals) - 23%

- This is vulnerable to climate change, global economics and price fluctuations.

• very dependent on the weather for good yields

advantages and disadvantages of TNCs

ADVANTAGES:

• by 2024, could be around 1 million jobs created by tourism, TNCs like HILTON HOTELS provide some of these

• hotel school trainee programme grants more than 150, 3 month apprenticeships each year to local people → YOUNG PEOPLE gain transferrable skills they can apply to higher paying work later on in life. BREAKS POVERTY CYCLE (send kids to school)

• 800,000 tourists expected in 2024 that will need accommodation like HILTON HOTELS

• this is expected to contribute over 2 billion dollars to Ethiopia’s GDP

• KNOCK ON EFFECT- government can now invest profit from tourism into health and education facilities

DISADVANTAGES

• Jobs are mainly seasonal, LOW PAID, long hours and don’t require high levels of skill

• the highest paying jobs go to people in external countries, like US where the HQ is located

• CULTURAL CLASHES between locals and tourists could cause resentment towards tourism for benefitting only the elite few

INTERNATIONAL AID

• Oxfam giving aid for over 30 years

• OXFAM has operated ‘Goat Aid’ in Ethiopia

  • SUSTAINABLE

  • AIMED AT GIRLS AND YOUNG WOMEN

• The ‘Girl Effect’ is the idea that if young girls are supported to receive education, income and security this could avoid issues like child marriage, prostitution, diseases etc.

• then they can become equal members of society

• thus improving development by having more people working

• GOAT AID ENCOURAGES GIRL EFFECT

  • pair of goats given to 12 yr old girl

  • goats breed to make a flock

  • milk from goats used to drink or make cheese or the meat can be eaten

  • better nutrition = better health

  • the surplus produce is SOLD and the money is used for education, clothing and other food

  • status and wealth improves as the flock is re-bred

  • cycle starts again but with even more goats this time

  • leads to a sustainable increase in wealth, decrease in child marriage, equality for girls and decrease in birth rates

DISADVANTAGES OF AID:

• fostered dependency on international aid, they aren’t striving to make resources for themselves

• MONEY AID may be given to a corrupt government who won’t invest it in the good of the people

INTERNATIONAL DEBT RELIEF

• in 2006 Ethiopia benefitted from DEBT RELIEF

• 10 billion dollars worth of debt down to 7 billion in 2012 as a result of debt relief

• government was able to invest more money in health and education

HOWEVER

• still relies on 500 million dollars of international aid every year

• 7 billion is still a lot of debt and prevents widespread change and development

TOP DOWN DEVELOPMENT

Gibe 111 Dam on the Omo River

ADVANTAGES:

• SOCIAL:

  • it grants flood protection (house damage, less loss of life, less disease spreading)

• ECONOMIC:

  • 50% of electricity is dispatchable

  • Ethiopia can export it to countries like Kenya and Sudan

  • INCREASES GDP

  • predicted to bring about 407 million dollars a year for the country becoming its most valuable export

  • more money in government for education and healthcare facilities

• ENVIRONMENTAL:

  • renewable energy so does not contribute to climate change

DISADVANTGAES

• SOCIAL:

  • 200,000 people below the dam rely on the river for food and travel and SUBSISTENCE

  • without it their fisheries will be destroyed = increase in famine

  • inter-community conflicts increase as they fight over limited resources

• ECONOMIC:

  • VERY EXPENSIVE- cost 1.8 billion dollars

  • instead of going to facilities

• ENVIRONMENTAL

  • plants and animals below the dam die of water deprivation

BOTTOM UP DEVELOPMENT

Farm Africa

ADVANTAGES:

• SOCIAL:

  • helps 7000 women in small communities

  • 3 goats per girl who will then give 3 goats to another girl from her flock

  • positive cycle that encourages GIRL EFFECT

  • generate enough money to feed a family all year round, and for education

• ECONOMIC:

  • establishes positive cycle in the local economy that allows children to go to school, get higher paying jobs, increase GDP, better facilities

• ENVIRONMENTAL:

  • goat manure helps fertilise soil, helping to increase crop yield

NEGATIVES

• SOCIAL:

  • can cause conflict and inequality in the small communities over who gets the benefits and the support

• ECONOMIC:

  • water pumps lead to water shortages and dry soil- could crash the local economy if rainfall is low because of the dependency on crops

• ENVIRONMENTAL

  • dry soil

  • leeching and water pollution