Guns n Roses. The Political Economy of High Speed Development in Ethiopia. Christopher Cramer (SOAS, University of London)

Transcription

1 Guns n Roses The Political Economy of High Speed Development in Ethiopia Christopher Cramer (SOAS, University of London)

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3 All eyes on Addis What makes Ethiopia different? The pursuit of legitimacy through development The political economy of being in a rush Crisis in a democratic developmental state?

4 ETHIOPIAN EXCEPTIONALISM

5 It ought not to work Not only landlocked but became more landlocked Bad neighbourhood /political marketplace Lack of settler institutions history aka noncolonial Africa Unfinished national/imperial project (Markakis s two frontiers) Policy syndromes

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7 And yet Sustained rapid growth: per capita real GDP growth of 8.3 per cent/year (higher than past; higher than low-income or regional average same period) Despite El Niño related drought, 2015/16 still one of the highest growth rates in the world Not mineral dependent Relative stability Striking poverty reduction Visible transformation: driving the Balance of Payments Highway

8 Growth & major events

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10 Poverty Reduction

11 Why this exceptionalism matters The challenge to tired orthodoxies the negative growth effects of heterodox macro policies were quantitatively less important than the positive growth drivers they helped to achieve (Moller and Whacker, World Development 2017) Does he get it? The consequences of failure

12 The pursuit of catching up LEGITIMACY THROUGH DEVELOPMENT?

13 Threats and commitments Context: state formation and nation building: unfinished imperial project and the highland/lowland drama Strategy: From war to the democratic developmental state Strategy: Controlling rent seeking and resisting the political marketplace Tactics: Exploiting geo-strategic significance Tactics: GERD, road building, ethnic federalism and the trade-off between inclusivity and resource concentration

14 Balance of payments constrained growth

15 THE POLITICAL ECONOMY OF HIGH SPEED DEVELOPMENT

16 IP on speed Time is central to development and catching up ; development as acceleration That much is obvious but the pressure of time on politics/economics is often overlooked The politics of speed being in a hurry for purposes of survival may play a role like over optimism in Hirschman s principle of the hiding hand Or the principle of the throttling hand?

17 And Ethiopia is in a hurry GTPII goals To be a middle income country by 2025 To sustain annual real GDP growth of 11 per cent To increase jobs created by medium & large enterprises from 380,000 (2014/15) to 750,000 by 2019/20

18 1. Politics, housing, cement The 2005 elections => change of direction Urban housing investment State support for national cement industry Linkages cement-construction-suppliers Too modern, too radical?

19 Lower middle income condominiums

20 2. Dammed if you do, damned if you don t Electoral politics, legitimacy and hydro-power 55 % federal budget on infrastructure Power outtages and industry Political commitment to Grand Ethiopian Renaissance Dam: rhetoric of speed narrow margin for failure Financing creativity, including diaspora bonds

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22 Hydro-diplomacy

23 3. Floriculture: blooming sector and the seeds of trouble Associated with Meles; rhetoric of speed Time pressure critical to success; forex pressure Learning by lending; lack of reciprocal control mechanism? Compensation, property rights, and securing the conditions of private sector investment (the guns); but also A clash of times? Why does learning seem to lag in some areas? (Oromia conflict) Ignoring the industrialization of freshness

24 Easy/Difficult

25 4. Electoral politics/legitimacy and linkages

26 Time a factor in which version of China-Africa prevails? Is Africa nothing but the latest Chinese SEZ, a kind of overseas Shenzhen? OR China going out: pioneer of African capitalism?

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30 5. H&M and PVH in Hawassa (largest industrial park in Africa)

31 Hirschman vs. Stiglitz? Stiglitz competencies should determine reach of policy Can ambition/speed + role model drive policy and raise competencies?

32 CRISIS IN THE DEVELOPMENTAL STATE, 2016-?

33 Challenging the Addis Master Plan Addis Ababa has run out of space (Felix Heisel, Karlsruhe Institute of Technology)

34 Attacking agribusiness

35 Why? The national question Creeping political marketplace Rising expectations Food price inflation Rhetoric of land grabs and lack of compensation Gender, labour markets and violence

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37 DECLINING CONSUMPTION OF THE BOTTOM 15 % OF HOUSEHOLDS (consumption growth for the remaining households averaged only 1.2%)

38 Average Annual Growth of Consumption: Poor and Other Households

39 How long does it take for wages to adapt to price spikes? In urban and small-town Ethiopia (for casual labourers) adjustments take a very long time: there is neither descriptive nor econometric evidence that wages substantially adjust to higher food prices, except in the long run (Heady et al, 2012) In coffee growing areas in , no evidence that rural wage workers can bargain to maintain real wages when food prices spike (FTEPR)

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41 Significance? Kalecki would suggest that wage goods inflation in Ethiopia will impose limits on the growth of investment in infrastructure and manufacturing industry Kalecki would also be concerned by the political implications of long periods of decline in the standards of living of the poor/wage workers

42 conclusions Perhaps the most interesting experiment in development policy in Sub-Saharan Africa But it is in the balance (and in the imbalance!) And it matters because growth shrinkage (rate and frequency) is more important in the long run than the high growth rates the EPRDF is obsessed with