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Ethiopia Needs Long-term National Development Plan (Part Five)

June 3, 2024

Tsegaye Tegenu, PhD
2024-06-01

In part four we have discussed six major underlying causes and sub causes of the 41 recurrent problems facing the country. The major underlying causes are: i) Macroeconomic and governance issues, ii) Structural transformation and investment, iii) Resource scarcity and livelihood strategies, iv) Chronic poverty, v) Spatial under development, and vi) Institutional weaknesses.

While understanding and identifying the underlying causes is a crucial first step, it is not sufficient on its own to solve these problems. Identifying underlying causes highlights what needs to be addressed but does not provide a roadmap for how to address them. Without actionable strategies, this knowledge cannot translate into change.

The roadmap to address the underlying causes require comprehensive analysis of the situation, including the broader context in which the underlying causes exist. When preparing a long-term national development plan, the responsible agency, often a planning commission or similar body, undertakes a comprehensive process of data collection and situational analysis. This process typically includes a detailed examination of both macroeconomic and sector performances, among other critical areas.

The macroeconomic perspective focuses on the economy as a whole, analyzing aggregate indicators and phenomena such as GDP growth, inflation rates, unemployment rates, fiscal balance, trade balance, public debt and foreign investment flows. It looks at the overall economic environment and helps to understand the overall economic stability and growth prospects. It provides a basis for economic projections and future planning. The responsible agency collects data, among others, form National Statistics Offices, sector ministries and agencies, surveys and field studies to help in understanding broad trends and patterns that affect all sectors of the economy.

The sectoral perspective breaks down the economy into various sectors or industries, such as agriculture, manufacturing, services (such as finance and tourism), education and health. Each sector is analyzed individually to understand its specific dynamics, challenges, and contributions to the overall economy.

In the case of agriculture, the performance assessment includes analysis of productivity, crop yields, and rural development. In the case of manufacturing, it studies output, industrial diversification, and innovation. While the service sector is examined for its growth, the health and education sectors are assessed for their outcomes and attainments respectively.

A detailed examination of performance metrics of specific sectors allows the identification of unique challenges, opportunities, and facilitates targeted interventions and policies to address sector-specific issues. It helps in allocating resources efficiently across different sectors based on their needs and potential for growth. It also enables the identification of key sectors that can drive economic development and diversification.

Analyzing the economic situation in terms of macroeconomic factors and sectors is more than just for convenience; it reflects the inherent structure and functioning of the economy. The macroeconomic perspective provides a holistic view of the economy’s overall performance and stability. The sectoral perspective examines how different sectors contribute to employment and income generation and helps in addressing issues related to sectoral imbalances and promoting inclusive growth. Both perspectives are essential for understanding the complex and interconnected nature of the economy, formulating effective policies, and promoting sustainable and inclusive economic growth.

When formulating long-term national development plan, understanding the macro and sectoral levels economy is crucial. Macroeconomic analysis helps in designing policies to ensure economic stability, manage inflation, and foster sustainable growth. It also informs decisions on allocation of resources, government spending, and investment priorities. Sectoral analysis identifies which sectors have potential for growth and development, guiding targeted investments and interventions. It helps in designing policies tailored to the needs and challenges of specific sectors, such as industrial policy for manufacturing or innovation policy for technology.

I think the Ethiopian government has a tradition of comprehensive understanding of both macroeconomic and sectoral performance when formulating national development plans. There is a national statistical agency that provide accurate and up-to-date economic data. There is also a Planning Commission that plays a crucial role in the formulation, implementation, and monitoring of national development plans. However, the effectiveness of national development plans depends not only on government’s ability to analyze and integrate macroeconomic and sectoral performance data into its planning process, but also in its ability to implement and monitor the plan. You can guess how the policy process is turned into practice; stay tuned for the government’s policy choices and design based on the assessments.

 

1 Comment

  1. Some people interpret my sharing of concerns and knowledge as if I am doing it for personal gain or advertisement. However, I do not seek either. I have two primary reasons for writing these short articles:

    First and foremost, I have the Ethiopian youth in my heart. They deserve freedom from the persistent civil wars that have ravaged our country for the past five decades. Many have lost their lives due to internal conflict and outmigration. They deserve better. A consensus on long-term national development can foster a shared vision and stop us from squabbling over trivial problems. By aspiring to a common future and understanding the challenges ahead, we can create a unified direction for our country.

    Second, the national development plan faces various challenges related to design, management, and implementation. These issues are rarely discussed, as everyone is often absorbed in their own areas of specialization. The national development plan has become the elephant in the room. It is essential to discuss different theories so that every specialist can see their role in the planning process. My goal is not a luxury but a necessity: to integrate all specialized experts and provide a holistic perspective.

    We cannot solve Ethiopia’s chronic problems with slogans alone. We need a deeper understanding of the issues. Even if my presentation seems abstract, it highlights the complexity of these problems, which cannot be resolved with mere catchphrases, slogans, or good intentions. To save the lives of Ethiopian youth, we need a thorough understanding of these complex issues and a vision for the future.

    Finally, I would like to thank the editors of The Habesha for their dedicated efforts in sharing knowledge with the Ethiopian people.
    Tsegaye

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Ethiopia Needs Long-term National Development Plan (Part Four)
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Ethiopia Needs Long-term National Development Plan (Part Four)

Ethiopia Needs Long-term National Development Plan (Part Six)
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Ethiopia Needs Long-term National Development Plan (Part Six)

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