Download Reaching Critical Mass to Rapid Industrialization and

Reaching Critical Mass to Rapid Industrialization and Agricultural
Fundamentalism in Ethiopia
Tsegaye Tegenu, Ph.D.
March 14, 2014
Ethiopian population has now topped 85 million, the second largest population in Africa.
According to the medium variant projection made by Central Statistic Authority (CSA), the
population may reach 137 million by 2037. The proportion of urban population will almost
double from 17 to 32 per cent. The number of urban population will substantial increase from
about 15 million to 43 million.
I advocated industrialization-led structural transformation as policy instrument to solve the
consequences of rapid growth of the Ethiopian population. The severe material scarcity and
mass unemployment caused by exponential population growth in the country will only be
solved through industrialization led structural transformation. It is impossible to catch up the
consequences of population growth based on priority given to the promotion of smallholder
agriculture. My motto and development cry is "rapid industrialization by all means,
everywhere and through big push". (see reference below).
The design and implementation of an appropriate policy is absolutely essential to avoid
Malthusian catastrophe scenarios and news we are reading today. In this short article I would
like to continue stress the need for rapid industrialization by reference to the advantages of an
increase in population size. The current population size close to 90 million and the projected
number is an advantage to form a strong and sustainable industrialization in the country.
According to various theories, industrialization becomes self-sustained when reaching at a
critical mass of users and complementary products necessary for emergence of new industries.
My thesis is that in a situation where there is large population size industrialization spreads
fast and becomes self-sustained due to the number of users (market force) and lower costs of
spreading technology. Industrial production, its system and innovation are introduced faster in
a high population area than in countries with lower population. Today Ethiopia has a chance
of easily attaining critical mass needed for industrial
formation.
But for the population size "to go to critical" there should
be an interaction between various elements of industrial
formation: technology, markets, business models,
entrepreneurship, industry dynamics, government
investment, production and supply networks. One of the
major challenges involved with industry formation in
Ethiopia is a mindset which give priority to subsistence
agriculture, a culture of glorifying livestock ownership and
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romanticizing indigenous tribal life. I call this mindset as agricultural fundamentalism which
is prevalent among politicians and intellectuals working in national and international
agricultural institutes (I do not expect a graduate from agriculture to advocate for
industrialization).
Fundamentalism is a term which is used in different contexts to describe strict adherence
to religious, market or institutional doctrines based on a literal interpretation of the
Bible/Quran, free trade or developmental state respectively. Agricultural fundamentalism is a
doctrine which believes that agriculture is a foundation of industrialization and commerce
("get agriculture first right"). This faith first spread in USA as a "disease" in the early 1920s
when agriculture experienced a crisis. To save farmers affected by the 1920s crisis agriculture
was advertised as the basis of American prosperity and keystone to USA economy.
Advocates called for state intervention and massive state investments in the poor regions (see
Davis, J. S, On Agricultural Policy, 1926-1938). Agricultural fundamentalism survived in the
1970s during the period of the green revolution.
In the case of Ethiopia there are obvious reasons why agriculture should be considered as
fundamental to the development process in the country: 80 per cent of the population live in
rural areas engaged mainly in agricultural and livestock activities. The agricultural sector
accounts for roughly 43 per cent of GDP, and 90 per cent of exports. Livestock production
accounts for about 32 per cent of agricultural GDP. It is believed that the agricultural sector
greatly influences economic performance in Ethiopia and should thus be given priority.
I opposed this view on many accounts (see reference). At a time when labor force growth
is characterized by young age and a household types of higher consumption requirements
(child rich families) investment in agriculture is costly. The Government of Ethiopia has
allocated 42% of the GDP to the agricultural sector and we still have a low per capita
production and lack of asset accumulation in rural areas. My conclusion is that at a time of
rapid population growth agriculture cannot be the engine of economic growth and history has
shown that countries which have experienced rapid growth of productivity and per capita
income have done so by giving priority to industrialization.
Yet despite the evident gains from industrialization and the success of many countries
achieving it, the Ethiopian government has planned to significantly increase the public
investment in agriculture from Birr 14.7 Billion by 2014/15, to Birr 29.5 Billion by 2020. I do
not understand why spend so much tax money on private smallholder (cost increasing)
agriculture rather than investing in public goods that generate advantage to size and economic
of scale. Through agriculture, the Ethiopian population size has no possibility to reach a
critical mass of consumer and producer of industrial products. Placing the industrial sector at
the center of the development in Ethiopia requires a battle against the doctrine of agricultural
fundamentalism. Unless we deliberately change the mindsets of our politicians and
intellectuals to see the need for rapid industrialization of the country, we will continue to hear
the depressing news of population loss and economic crash in Ethiopia.
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Reference: Debate on alternative development strategy and evidence
based policy (2010-2011)
http://aigaforum.com/articles/Get_the_diagnosis_right.htm
http://www.aigaforum.com/articles/Labour_Force_Growth.pdf
http://aigaforum.com/articles/GreenRevo_Industrial_policy_Ethiopia.pdf
http://aigaforum.com/articles/Green_Revolution_PartTwo.pdf
http://www.aigaforum.com/articles/reflection_on_gtp.php
http://aigaforum.com/articles/Green_Revolution_response1.htm
http://aigaforum.com/articles/Green_Revolution_smallholder.htm
http://aigaforum.com/articles/Final_response_on_green_revolution.htm
http://aigaforum.com/articles/Problems_of_Institutional_instability.htm
http://www.aigaforum.com/articles/condition_forms_industrial.php
http://aigaforum.com/articles/Future_of_SmallFarms.pdf
http://aigaforum.com/articles/miss_conceptualizing_smallfarms.pdf
http://www.aigaforum.com/articles/structural_transformation.pdf
http://www.aigaforum.com/articles/Large_scale_technology_ethiopia.pdf
http://aigaforum.com/articles/Idea_of_Industralization_Ethiopia.pdf
http://aigaforum.com/articles/Speeding_Industrialization_Ethiopia.pdf
http://aigaforum.com/articles/export_or_domestic_led.php
http://www.aigaforum.com/articles/understanding_egypt_rev.php
http://www.aigaforum.com/articles/Revisiting_Youth_Bulge.pdf
http://www.aigaforum.com/articles/reflection_on_gtp.php
http://aigaforum.com/articles/population_pressure_south_eth.pdf
http://www.aigaforum.com/articles/regional_dev_policy.php
http://aigaforum.com/articles/Population-and-Economic-Growth-Ethiopia.pdf
http://aigaforum.com/articles/Ethiopia-Opportunity-of-Rapid-Industrialization.pdf
http://aigaforum.com/articles/how-to-create-rapid-and-quality-jobs.pdf
http://aigaforum.com/articles/Industrialization-by-all-means-2014-01-16.pdf
http://www.meleszenawi.com/wp-content/uploads/2013/07/Ethiopian-ExponentialPopulation-Growth-Consequences-Carrying-Capacity-of-the-Ethiopian-Economy.pdf
The author can be reached at [email protected]
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