Ethiopia economic performance

Botswana has been a successful story in Africa, not without its critics. Ghana and Rwanda have made outstanding improvements in economic development. More recently there is discussion on the case of Ethiopia. 

A chart of the rates of growth of the country shows that Ethiopia has grown around 10 percent since 2004, in spite of recent reduction in foreign direct investment. 

According to this The Economist article Ethiopia is the front runner, non-oil economy, in the continent. The article however is critical:

Poverty is pervasive, raising questions over how fast a consumer class will emerge. Agriculture is still a big source of national income, accounting for more than 40% of GDP and more than 80% of employment. Almost all private businesses are small: family-owned vendors and repair shops, the kind whose customers cannot suffer inflation for long. Credit is hard to come by for the unconnected. Only licensed exporters consistently benefit from repeated devaluations of the currency. To invest in Ethiopia is to invest in the frontier.

Rural Clusters

Clustering is an important structure of production in the rural nonfarm sector. Based on a primary survey of rural handloom clusters in Ethiopia, this article examines the mechanism and performance of clustering. Given weak financial institutions, clustered producers and traders use trade credits to ease working capital constraints. Moreover, geographical clustering enables entrepreneurs with limited capital to enter the business through shared workspaces and fine division of labour. An improvement in infrastructure can further enhance firm performance in a cluster. In towns with electricity access, producers work longer hours by sharing lit workspaces at lower rental cost.

That is the abstract of the paper "Infrastructure and Cluster Development: A Case Study of Handloom Weavers in Rural Ethiopia." It was published in the latest number of the Journal of Development Studies. A draft is here. Some introductory notes on the geography of innovation and clustering are here.