Does agriculture played a vital role to induce faster growth in Ethiopia? Under what conditions it played important role? Those questions are very important to search for smallholding farming role in economic development of Ethiopia. It is central to predict the future of agriculture in economic growth and recommend choices of idea for policy makers. The fundamental economic strategy of state in Ethiopian during its startup was to ensure rapid economic development, extricate dependence on food aid & ensure people benefit.
The first five year plan (2001-2005) called Sustainable Development and Poverty Reduction Program (SDPRP) was formulated to eradicate poverty, carries toward important strategic directions such as infrastructure, food security and capacity building. In the first five year plan agricultural production was increased by 17.3% & 13.4% due to the pervasiveness of favorable conditions such as adequate rain & supply of agricultural inputs . Backing the first five year plan Ethiopia implemented three five years plans. The second plan commonly called plan for accelerated & sustained development to end poverty (PASDEP) was a guiding strategic framework for the second five year period (2006-2010).
After PASDEP, Ethiopia adopted a 5-year Growth and Transformation Plan (GTP I) in November 2010, which aims to endure faster & broad-based growth path witnessed the past seventeen years & eventually end poverty emphasizing on agriculture, promoting industrialization, & investment in infrastructure. In October 2015, Ethiopia launched the second five-year Plan called GTP II, setting medium-term economic policy priorities. The key goal of GTP II is for Ethiopia to become a lower middle-income country by 2025, through average annual GDP growth of 11 percent in 2015– 2020. In GTP II a key emphasis was given to private investment & FDI, particularly building export-oriented manufacturing sector.
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Overall economic assessment disclosed that GDP growth averaged 10.9 percent from 2004 to 2014. If population growth of 2.4 percent per year considered real GDP per capita average growth rate indicatUnder the communist Derg regime (1974–91) the real GDP growth per capita growth was –1.0 percent, whereas during monarchy (1951–73) the real GDP growth per capita was 1.5 percent. Droughts and elongated civil war created unstable growth patterns prior to 2004, but growth has been faster & steady, then after an outstanding performance from a historical perspective, which indicates differences in role of states in economic performance. Agriculture’s share of GDP has not altered much, but the composition of agricultural output has improved vividly as its overall value shows enlargement.
The cause of accomplishment according as to the official report was increased cultivated land instead of productivity, which remains low . Although, Ethiopia had practiced high performance & shows a little structural change away from agriculture towards services, the parallel change in total factor productivity has been much lower. These clearly indicate the role of manufacturing is very poor and stagnates for a long year with insignificant contribution to economic growth 8.0 percent per year. The result significantly outperforms per capita growth rates before the country’s transition to a market-based economy.
