The Developmental State Seen Through the Prism of an Emergence of a Domestic Industrialist Class in Ethiopia: The Case of the Metals and Engineering Sector
By Sibulele NKunzi (PhD candidate, University of the Witwatersrand, South Africa)
Date: Thursday December 6, 2-4 pm
Venue: Berhanou Abebe Library, French Centre for Ethiopian Studies (Jan Meda, https://goo.gl/maps/sutSritp3MU2)
Ethiopia is achieving rapid economic growth and development despite historic and current challenges. Ethiopia is an exemplary 21st century case of bridging the continental wide gap in African indigenous productive capitalists by using state-owned enterprises, military-owned enterprises, party-owned firms, and strategic links and joint ventures with foreign investors to build a productive-and-patriotic class of domestic capitalists, albeit nascent at this point in time. Recognizing that reciprocal control mechanisms (RCMs) are the linchpin of industrial policy success, the research explores how they are managed in Ethiopia when such firms can prove hard to discipline.
Through a political economy lens, the research focuses on the significance of relatively complex manufacturing sectors. An examination of industry trends such as investment, trade, productivity, building of domestic technological, research and industrial capabilities is carried out through a focus on a particular case study: Ethiopia’s metals and engineering industry. The sector is considered “complex” in this context given Ethiopia’s low-level of manufacturing capabilities, human capital and education, and non-existent comparative advantages. The case is interpreted in light of the developmental state with respect to the business-state-relationships (BSR) between the state and capital; in particular the bargains that the state makes with an industrialist class as some industrial policy instruments contextually become more and others less important in the support of the industry. The research aims to highlight the challenges associated with learning from failure on a national, sectoral and firm level, including institutionally in terms of policy.
The case-study is an attempt to move the developmental state literature forward by grappling with the pendulum question of the possibility of industrial policy at national level in an era of globalized production structures and networks. The argument in my research is that those in the academic fraternity as well as policy making authorities in aspirant African developmental states should consider those dimensions of industrial policy that are evident in Ethiopia’s ambitious Growth and Transformation Plan, which in effect challenge the pessimism associated with low-income countries turning to complex manufacturing structures. It is argued that though such ambition is often questioned by neoclassical economists, such an “over optimism” and the associated “hiding hand” (as Hirschmann (2002) referred to it) is often associated with important developmental effects.
Sibulele Nkunzi is a second year PhD Candidate in Applied Development Economics at the University of the Witwatersrand in Johannesburg, South Africa. His PhD focuses on industrial policy and political economy dimensions of the Ethiopian developmental state. His research and teaching interests are in fieldwork-led academic and policy work with a focus on industrialization, industrial policy, labour, trade, technology, as well as methodological debates in economics.