Economic Openness: Ethiopia Case Study

With a more open and inclusive economy and a stable political settlement, over the coming decades, our work shows that sustainable economic growth can take Ethiopia on a path to a solid upper middle-income status.

A report for the Global Index of Economic Openness programme

Published 27 Sep 2021

The Legatum Institute’s mission is to create a global movement of people committed to creating the pathways from poverty to prosperity and the transformation of society. Our research work is focused on understanding how prosperity is created, and to that end, with the generous support of the Templeton World Charitable Foundation, we have published a Global Index of Economic Openness to rank countries’ ability to interact with, and benefit from, both domestic and international commerce.

This Ethiopia case study is one of a number of in-depth reports which analyse an individual country’s performance on the key characteristics of openness to trade, investment, ideas, competition, and talent.

You can download the report here.

Our report highlights that Ethiopia is at a pivotal moment in its history.  With a more open and inclusive economy and a stable political settlement, our report emphasises how over the coming decades, sustainable economic growth can take Ethiopia on a path to a solid upper middle-income status.

In particular, our report emphasises how achieving greater levels of prosperity will require a more democratic political settlement, as well as the different regions and the centre working together for common interests and objectives. Moreover, a ‘merit-based’ civil service is needed – focusing on the needs of the citizen; as well as a truly competent and independent judiciary; and a new civil service ethos that demonstrates a commitment to service and empathy and zero-tolerance for corruption, embraces transparency and brings public services closer to all Ethiopians, for example, through digitalisation.

With the Government committed to more privatisation as the country charts its way towards prosperity, and ministers clearly understanding the need to shift the direction of capital away from the state and towards private markets, it is vital that Ethiopia also shifts its broader regulatory order to accommodate an embracing of private enterprise and capital.

The report therefore recommends putting the private sector in the driving seat, moving away from a heavily state-led and controlled economy in order to create an environment where enterprise can flourish.

However, the report cautions that whilst the Government has committed to a privatisation process it is important that this is carried out when the judiciary and the rule of law systems in the country have been strengthened, to avoid the risks of corruption in these processes, as experienced in other countries.

To learn more, you can read the report by clicking here.

Addis Ababa, Ethiopia – April 6, 2009: Daily life in the centre of Addis Ababa, view from the crossing of Cunningham street and Churchill avenue. The street in the middle on the photo is the Churchill avenue, on the end of this avenue si the main railway station.

Note: The Ethiopia case study report uses data from the Legatum Prosperity Index, so some rankings and other statistics may differ from the previously published Global Index for Economic Openness and related country profile datasheets. 


Economic Openness: Ethiopia Case Study

Sep 2021

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