Section 1
Financial Measures
Ethiopia’s GDP per capita, the total of all economic activity in a country divided by the total number of the population, is $357.02 (current US$) (World Bank). GNI per capita is the total income that is earned by a country’s factors of production, regardless of where they are located, divided by the total number of the population. Ethiopia’s GNI per capita is $356.20 (current US$) (World Bank). This number does not include the income of foreign companies producing within Ethiopia, but does include the activity of its own companies producing outside of the country. Ethiopia’s GDP is not significantly higher than its GDI, depicting that Ethiopia does not have a large amount of Foreign Direct Investment. Ethiopia’s GDP is only slightly higher than its GDI figure, indicating that Ethiopia has a negative flow in terms of net property income from abroad, suggesting that there is a small movement of earnings from assets leaving Ethiopia to go abroad. Ethiopia needs to increase its GDP in order to improve the well-being of the country and it would also show that the people of Ethiopia were being more productive and efficient.
However, these figures do not reflect the reality of financial comparisons between countries completely because goods and services do not cost
the same price in different countries, so the purchasing power of someone’s income will be different. To avoid this, the purchasing power parity is used,
which attempts to equate the purchasing power of currencies in different countries. Ethiopia’s GDP per capita is $372.02 (current US$) (World Bank).
Ethiopia’s GDP per capita at purchasing power parity (PPP) is $1,108.90 (current international $) (World Bank). Because Ethiopia’s GDP per capita at PPP is
larger than its GDP per capita, it depicts that people in Ethiopia have a greater purchasing power because goods and services cost less in Ethiopia.
Health Measures
The average person living in Ethiopia can expect to live about 59.2 years, not a very old age compared to many developed nations (World Bank).
In order for a country to obtain a relatively high life expectancy, there are numerous factors that need to be met, including appropriate levels of health
care and services, clean water supplies and appropriate sanitation, education spread throughout the entire country, adequate supplies of food, low poverty
levels, and peace throughout the country. Ethiopia lacks many of these factors, contributing to a population with a lower life expectancy. Ethiopia’s life
expectancy emphasizes its status as a developing nation because while Ethiopians struggle to reach 60 years of age, people in developed nations are living over
20 years longer, enabling them to be able to contribute more and aid economic growth and development.
In Ethiopia, the infant mortality rate, the number of deaths of babies who have not yet reached one year of age per thousand live births in a given year, is 51.5 (World Bank). The level of health care and health services, the availability of sanitation, water, and food, and the level of poverty all greatly affect this
number. Ethiopia’s higher infant mortality rate, as a result of the lack of funds to appropriately provide for health care, sanitation, etc., places it amongst the other developing countries, while countries like France, a highly developed nation, has an infant mortality rate of 3, which is over 15 times smaller than Ethiopia’s own infant mortality rate (World Bank). The large number of infants dying each year indicates the poor health care available in Ethiopia, and that poor health care hurts the productivity and therefore curbs economic development because when people fall ill, they are not able to get the care they need, causing them to miss more work create a fall in productivity.
Education Measures
The literacy rate in Ethiopia, the percentage of the population aged 15 or over that is literate, is 42.7% (CIA). This portrays that less than half of the adult population in Ethiopia can read. Developed nations have much higher literacy rates, such as the United States, which has a literacy rate of 99%. Ethiopia’s extremely low literacy rate emphasizes its status as a developing nation by depicting that the provision of education is not sufficient. This lack of education will be seen in Ethiopia’s low productivity, efficiency, and health levels, among other things. For Ethiopia to move past its status as a developing country, education needs to be more widespread and available, the relative wealth of Ethiopia needs to be improved so there can be more money to provide educational opportunities, and the distribution of income needs to be more even/poverty levels need to decrease so that everyone can afford to send their children to school instead of having them work to provide for the family.
While Ethiopia has a low literacy rate, its net enrolment ratio in primary education, the ratio of the number of children of primary school age who
are enrolled in primary school to the total number of children who are of primary school age in the country, is 86%, which places it in the low to medium
human development categories. One of the Millennium Development Goals is to have universal primary education for all children by 2015. It is unlikely that this
will occur when many developing nations, like Ethiopia, do not have a large enough relative wealth to allow for the equal, widespread provision of
education, have a large amount of income inequality that keeps many of the poorer families from sending their children to school, and high poverty levels,
which keep children from attending school because they are needed to gain extra revenue to provide for the family. If this value does increase, more children
will be attending school and over time productivity of the nation will increase.
Composite Indicators
Human Development Index
The Human Development Index (HDI) measures three variables, which includes a long and healthy life, improved education, and a decent standard of living. Ethiopia’s HDI is 0.363. This places Ethiopia in the low human development category (less than 0.500) (Human). This value also places Ethiopia at 174 out of 187 countries and territories. The low value and poor placement compared to all of the other countries portrays that Ethiopia has a poor life expectancy, poor literacy rate, inadequate net enrolment in ratio in primary education, and a small GDP per capita. HDI is used to measure development and, as shown by Ethiopia’s HDI ranking, Ethiopia is highly underdeveloped compared to the rest of the world, depicting that it remains a developing nation. While HDI is not perfect, it does not account for inequalities that occur between rural and urban citizens, between men and women, and between different ethnic groups, it is more accurate and effective
than GDP per capita alone.
The Gender-Related Development Index
The gender-related development index (GDI) uses exactly the same indicators as the human development index but it also takes into account the
inequalities for men and women. Ethiopia’s GDI is 0.393 out of 1, placing it 169 out of 177 countries (Gender). This places it very low in the rankings,
especially compared to developed countries that have GDIs of 0.9. Ethiopia’s GDI is greater than its HDI, which should mean that there is not any inequality
between men and women in Ethiopia. However, these numbers, both their GDI and HDI, are so low, 0.393 and 0.363 respectively, that women are still not getting
the necessities and basics, such as a healthy life, adequate education, or an improved standard of living, but neither are the men (GDI, HDI). In Ethiopia,
men and women both experience inadequate indicators of human and gender-related development, so while there is not a lot of inequality, there is a need to
improve the economic development for both men and women.
The Gender Empowerment Measure
While measuring development is important, it is also necessary to measure whether that development is aiding the creation of freedoms and
opportunities for women. The gender empowerment measure (GEM) measures the extent to which women are able to actively participate in economic and political
life. Ethiopia has a GEM of 0.477. While this value is still low, not as close to 1 which would show maximum empowerment of women, it is greater than their GDI
value, depicting that basic needs, health, and education are being translated into greater opportunities for women, which is an improvement. Also, 21.4% of
the seats in parliament are held by women, which indicates that women are becoming more involved in Ethiopia’s political life (Gender). This portrays that
while women are still not completely empowered in Ethiopia, they are holding positions and getting involved.
The Human Poverty Index
In an attempt to measure the level of deprivation and poverty experienced in a country, the human poverty index (HPI) has been developed. It
looks at the proportion of people who are deprived of the opportunity to reach a basic level in education, a long and healthy life, and the ability to meet basic
needs. Ethiopia’s HPI is 50.9% (HPI). This is a very high HPI value, among both developed and developing nations, indicating that there is a greater level of
deprivation and therefore a higher level of poverty in Ethiopia. Also, this high HPI value depicts that the benefits of development are not being spread evenly
within Ethiopia amongst the rich and the poor.
Financial Measures
Ethiopia’s GDP per capita, the total of all economic activity in a country divided by the total number of the population, is $357.02 (current US$) (World Bank). GNI per capita is the total income that is earned by a country’s factors of production, regardless of where they are located, divided by the total number of the population. Ethiopia’s GNI per capita is $356.20 (current US$) (World Bank). This number does not include the income of foreign companies producing within Ethiopia, but does include the activity of its own companies producing outside of the country. Ethiopia’s GDP is not significantly higher than its GDI, depicting that Ethiopia does not have a large amount of Foreign Direct Investment. Ethiopia’s GDP is only slightly higher than its GDI figure, indicating that Ethiopia has a negative flow in terms of net property income from abroad, suggesting that there is a small movement of earnings from assets leaving Ethiopia to go abroad. Ethiopia needs to increase its GDP in order to improve the well-being of the country and it would also show that the people of Ethiopia were being more productive and efficient.
However, these figures do not reflect the reality of financial comparisons between countries completely because goods and services do not cost
the same price in different countries, so the purchasing power of someone’s income will be different. To avoid this, the purchasing power parity is used,
which attempts to equate the purchasing power of currencies in different countries. Ethiopia’s GDP per capita is $372.02 (current US$) (World Bank).
Ethiopia’s GDP per capita at purchasing power parity (PPP) is $1,108.90 (current international $) (World Bank). Because Ethiopia’s GDP per capita at PPP is
larger than its GDP per capita, it depicts that people in Ethiopia have a greater purchasing power because goods and services cost less in Ethiopia.
Health Measures
The average person living in Ethiopia can expect to live about 59.2 years, not a very old age compared to many developed nations (World Bank).
In order for a country to obtain a relatively high life expectancy, there are numerous factors that need to be met, including appropriate levels of health
care and services, clean water supplies and appropriate sanitation, education spread throughout the entire country, adequate supplies of food, low poverty
levels, and peace throughout the country. Ethiopia lacks many of these factors, contributing to a population with a lower life expectancy. Ethiopia’s life
expectancy emphasizes its status as a developing nation because while Ethiopians struggle to reach 60 years of age, people in developed nations are living over
20 years longer, enabling them to be able to contribute more and aid economic growth and development.
In Ethiopia, the infant mortality rate, the number of deaths of babies who have not yet reached one year of age per thousand live births in a given year, is 51.5 (World Bank). The level of health care and health services, the availability of sanitation, water, and food, and the level of poverty all greatly affect this
number. Ethiopia’s higher infant mortality rate, as a result of the lack of funds to appropriately provide for health care, sanitation, etc., places it amongst the other developing countries, while countries like France, a highly developed nation, has an infant mortality rate of 3, which is over 15 times smaller than Ethiopia’s own infant mortality rate (World Bank). The large number of infants dying each year indicates the poor health care available in Ethiopia, and that poor health care hurts the productivity and therefore curbs economic development because when people fall ill, they are not able to get the care they need, causing them to miss more work create a fall in productivity.
Education Measures
The literacy rate in Ethiopia, the percentage of the population aged 15 or over that is literate, is 42.7% (CIA). This portrays that less than half of the adult population in Ethiopia can read. Developed nations have much higher literacy rates, such as the United States, which has a literacy rate of 99%. Ethiopia’s extremely low literacy rate emphasizes its status as a developing nation by depicting that the provision of education is not sufficient. This lack of education will be seen in Ethiopia’s low productivity, efficiency, and health levels, among other things. For Ethiopia to move past its status as a developing country, education needs to be more widespread and available, the relative wealth of Ethiopia needs to be improved so there can be more money to provide educational opportunities, and the distribution of income needs to be more even/poverty levels need to decrease so that everyone can afford to send their children to school instead of having them work to provide for the family.
While Ethiopia has a low literacy rate, its net enrolment ratio in primary education, the ratio of the number of children of primary school age who
are enrolled in primary school to the total number of children who are of primary school age in the country, is 86%, which places it in the low to medium
human development categories. One of the Millennium Development Goals is to have universal primary education for all children by 2015. It is unlikely that this
will occur when many developing nations, like Ethiopia, do not have a large enough relative wealth to allow for the equal, widespread provision of
education, have a large amount of income inequality that keeps many of the poorer families from sending their children to school, and high poverty levels,
which keep children from attending school because they are needed to gain extra revenue to provide for the family. If this value does increase, more children
will be attending school and over time productivity of the nation will increase.
Composite Indicators
Human Development Index
The Human Development Index (HDI) measures three variables, which includes a long and healthy life, improved education, and a decent standard of living. Ethiopia’s HDI is 0.363. This places Ethiopia in the low human development category (less than 0.500) (Human). This value also places Ethiopia at 174 out of 187 countries and territories. The low value and poor placement compared to all of the other countries portrays that Ethiopia has a poor life expectancy, poor literacy rate, inadequate net enrolment in ratio in primary education, and a small GDP per capita. HDI is used to measure development and, as shown by Ethiopia’s HDI ranking, Ethiopia is highly underdeveloped compared to the rest of the world, depicting that it remains a developing nation. While HDI is not perfect, it does not account for inequalities that occur between rural and urban citizens, between men and women, and between different ethnic groups, it is more accurate and effective
than GDP per capita alone.
The Gender-Related Development Index
The gender-related development index (GDI) uses exactly the same indicators as the human development index but it also takes into account the
inequalities for men and women. Ethiopia’s GDI is 0.393 out of 1, placing it 169 out of 177 countries (Gender). This places it very low in the rankings,
especially compared to developed countries that have GDIs of 0.9. Ethiopia’s GDI is greater than its HDI, which should mean that there is not any inequality
between men and women in Ethiopia. However, these numbers, both their GDI and HDI, are so low, 0.393 and 0.363 respectively, that women are still not getting
the necessities and basics, such as a healthy life, adequate education, or an improved standard of living, but neither are the men (GDI, HDI). In Ethiopia,
men and women both experience inadequate indicators of human and gender-related development, so while there is not a lot of inequality, there is a need to
improve the economic development for both men and women.
The Gender Empowerment Measure
While measuring development is important, it is also necessary to measure whether that development is aiding the creation of freedoms and
opportunities for women. The gender empowerment measure (GEM) measures the extent to which women are able to actively participate in economic and political
life. Ethiopia has a GEM of 0.477. While this value is still low, not as close to 1 which would show maximum empowerment of women, it is greater than their GDI
value, depicting that basic needs, health, and education are being translated into greater opportunities for women, which is an improvement. Also, 21.4% of
the seats in parliament are held by women, which indicates that women are becoming more involved in Ethiopia’s political life (Gender). This portrays that
while women are still not completely empowered in Ethiopia, they are holding positions and getting involved.
The Human Poverty Index
In an attempt to measure the level of deprivation and poverty experienced in a country, the human poverty index (HPI) has been developed. It
looks at the proportion of people who are deprived of the opportunity to reach a basic level in education, a long and healthy life, and the ability to meet basic
needs. Ethiopia’s HPI is 50.9% (HPI). This is a very high HPI value, among both developed and developing nations, indicating that there is a greater level of
deprivation and therefore a higher level of poverty in Ethiopia. Also, this high HPI value depicts that the benefits of development are not being spread evenly
within Ethiopia amongst the rich and the poor.
Section 2
Common Characteristics of Developing Countries
1. Low Standards of Living, Characterized by Low Incomes, Poor Health, and Inadequate Education
In Ethiopia, the majority of the population has a low standards of living, depicted through their high poverty levels, high levels of inequality, poor housing, low standard of health, high infant mortality rates, high levels of malnutrition, and overall lack of education. The statistics in the link below depict many of these factors, portraying that low standard of living. For example, Ethiopia’s low literacy rate of 42.7% and low net enrolment ratio in primary education, 86%, depict the lack of education in Ethiopia. High poverty levels in Ethiopia are shown through its high poverty headcount at national poverty line, 29.6% of the population. While this has improved from 44.2% in 1999, almost a third of the population is at poverty level, meaning that the citizens of Ethiopia cannot afford necessities, such as adequate
housing and vaccines to prevent diseases like malaria. Also, life expectancy at birth is 59 years of age, adding to the low standard of living (World Bank). All
of these factors contribute to the low standard of living in Ethiopia, which is a direct result of Ethiopia’s lack of economic growth and development.
2. High and Rising Levels if Unemployment and Underemployment
Most developing nations have unemployment rates of between 10% and 20%. As depicted in the statistics above, Ethiopia has an even higher
unemployment rate, at about 20.5% of the total labor force, emphasizing Ethiopia’s status as a developing nation. It is very difficult to measure unemployment in a developed economy, so unemployment rate estimates for developing countries are even more difficult to calculate. This unemployment rate does not even account for the people who have been unemployed for so long that they have stopped searching for work, those that work for a few hours in a family business, or the underemployed. Also, 85% of Ethiopia’s total employment is in the agricultural sector, much of it focused on primary products like coffee (CIA). It would be very difficult to calculate a statistic, but a portion of that number is most likely overqualified for those jobs in agriculture, which would again not factor into that unemployment rate. This high unemployment rate, which does not take into account other types of unemployment, greatly depicts Ethiopia’s status as a developing
nation.
unemployment rate, at about 20.5% of the total labor force, emphasizing Ethiopia’s status as a developing nation. It is very difficult to measure unemployment in a developed economy, so unemployment rate estimates for developing countries are even more difficult to calculate. This unemployment rate does not even account for the people who have been unemployed for so long that they have stopped searching for work, those that work for a few hours in a family business, or the underemployed. Also, 85% of Ethiopia’s total employment is in the agricultural sector, much of it focused on primary products like coffee (CIA). It would be very difficult to calculate a statistic, but a portion of that number is most likely overqualified for those jobs in agriculture, which would again not factor into that unemployment rate. This high unemployment rate, which does not take into account other types of unemployment, greatly depicts Ethiopia’s status as a developing
nation.
3. Substantial Dependence on Agricultural Productiona and Primary Exports
Ethiopia relies very heavily on agriculture and the export of primary products to support the country. Ethiopia’s major export crop is coffee.
When exports of this crop decrease, as seen in the article below, it can have detrimental effects on Ethiopia’s economy and its people. As stated previously,
the agricultural sector is responsible for employing 85% of the labor force in Ethiopia (CIA). If the exports, like coffee, are not reaping their full potential, it will affect all of the workers in the agricultural sector, a huge portion of the labor force, by decreasing their already low income. This can cause people to not be able to provide for their families or be forced to send their children to work instead of school in order to provide food, which decreases productivity in the future. Also, Ethiopia has poor cultivation methods and experiences drought frequently. This, added to the fact that Ethiopia’s economy relies so largely on coffee and agriculture, can cause great uncertainty in the economy. A yield that is not adequate, due to drought, will greatly hurt those employees and as of right now is unpreventable. While
different groups and organizations are working to improve Ethiopia’s agricultural methods, right now Ethiopia’s reliance on coffee and agriculture hinders both its economic growth and development.
Ethiopia relies very heavily on agriculture and the export of primary products to support the country. Ethiopia’s major export crop is coffee.
When exports of this crop decrease, as seen in the article below, it can have detrimental effects on Ethiopia’s economy and its people. As stated previously,
the agricultural sector is responsible for employing 85% of the labor force in Ethiopia (CIA). If the exports, like coffee, are not reaping their full potential, it will affect all of the workers in the agricultural sector, a huge portion of the labor force, by decreasing their already low income. This can cause people to not be able to provide for their families or be forced to send their children to work instead of school in order to provide food, which decreases productivity in the future. Also, Ethiopia has poor cultivation methods and experiences drought frequently. This, added to the fact that Ethiopia’s economy relies so largely on coffee and agriculture, can cause great uncertainty in the economy. A yield that is not adequate, due to drought, will greatly hurt those employees and as of right now is unpreventable. While
different groups and organizations are working to improve Ethiopia’s agricultural methods, right now Ethiopia’s reliance on coffee and agriculture hinders both its economic growth and development.
4. High Rates of Population Growth and Dependency Burdens
Population Growth Rate (annual %)
Child Dependency Ratio (%)
Old Age Dependency Ratio (%)
Ethiopia’s high rate of population growth, especially compared to other developed nations, at 2.1, helps add to the high child dependency
ratio, the percentage of people that are non-productive and under the age of 15, expressed as a percentage of those of working age, and low old age dependency
ratio, the percentage of those that are non-productive over the age of 65 divided by the percentage of the population ages 15 to 64. The high child dependency ratio of 73% indicates that Ethiopia has a high crude birth rate, the annual number of live births per 1,000 of the population. This depicts that the adults, mothers, and fathers in Ethiopia have to support a much larger proportion of children than the work force in developed countries. Therefore, families cannot save large amounts of money to allow for development, but rather have to spend their income on the children and support them. A low old age dependency ratio, of 6%, depicts Ethiopia’s low life expectancy, which portrays Ethiopia’s inadequate health care and overall status as a developing country (World Bank).
ratio, the percentage of people that are non-productive and under the age of 15, expressed as a percentage of those of working age, and low old age dependency
ratio, the percentage of those that are non-productive over the age of 65 divided by the percentage of the population ages 15 to 64. The high child dependency ratio of 73% indicates that Ethiopia has a high crude birth rate, the annual number of live births per 1,000 of the population. This depicts that the adults, mothers, and fathers in Ethiopia have to support a much larger proportion of children than the work force in developed countries. Therefore, families cannot save large amounts of money to allow for development, but rather have to spend their income on the children and support them. A low old age dependency ratio, of 6%, depicts Ethiopia’s low life expectancy, which portrays Ethiopia’s inadequate health care and overall status as a developing country (World Bank).
Diversity Among Developing Countries
1. The Structure of Industry
It is usually assumed that most developing countries rely upon the export of primary products. While Ethiopia has recently attracted a
significant amount of foreign investment in textiles, leather, commercial agriculture, and manufacturing and is working to expand its industry, Ethiopia is still highly dependent on the exportation of primary products, especially coffee. Ethiopia’s export dependence categorizes it as a developing nation because its great dependence makes it susceptible to problems with agriculture and changes in supply and demand. Ethiopia frequently experiences drought and has very poor cultivation methods. Because Ethiopia relies so heavily on coffee for export revenue, these problems can greatly decrease the revenue they gain from coffee exports, emphasizing its status as a developing nation (World Bank).
2. Historical Background
The majority of developing nations in Africa were once colonies of developed countries for major periods of time. However, this is not true of
Ethiopia. Ethiopia held on to its freedom except for a short period when it was occupied by the Italians. While colonization hurt many developing nations,
Ethiopia’s development was hindered due to other reasons. Ethiopia was ruled by a military junta from 1974 to 1991, who established a social state. Throughout
those years, Ethiopia faced many uprisings, drought on a very large scale, and major problems with refugees, which Ethiopia could not afford to support. This regime hindered Ethiopia’s ethnic growth and development due to the corruption in the government and its inability to deal with Ethiopia’s numerous problems,
instead increasing Ethiopia’s debt and hurting development. While Ethiopia has since adopted a constitution, the government is still focused on border
conflicts with neighboring Eritrea and diverts money that could be used for development to troops fighting and protecting the borders (CIA).
3. Per Capita Income Levels
Ethiopia’s GDP per capita at purchasing power parity (PPP), the total of all economic activity in a country divided by the total number of the
population that attempts to equate the purchasing power of currencies in different countries, is $1,108.90 (current international $) (World Bank).While a
low GDP per capita at PPP is pretty standard in developing nations, Ethiopia has one of the lowest GDP per capita at PPP’s in the world. This depicts that people
in Ethiopia have very little income, if they are even able to work. Such a small income most likely means that Ethiopians are unable to save their money because
they need to spend it immediately to help their families. Saving money would help get them out of the poverty cycle because they would be able to afford to send their children to school and provide better sanitation for their family, among other things. These would lead to economic development because a better
education and health can lead to increased life expectancy and increased productivity, which would also help with economic growth, and would hopefully
increase the standard of living overall. However, Ethiopia’s low incomes do not allow for this to occur in the majority of people, so Ethiopia remains a
developing nation.
1. The Structure of Industry
It is usually assumed that most developing countries rely upon the export of primary products. While Ethiopia has recently attracted a
significant amount of foreign investment in textiles, leather, commercial agriculture, and manufacturing and is working to expand its industry, Ethiopia is still highly dependent on the exportation of primary products, especially coffee. Ethiopia’s export dependence categorizes it as a developing nation because its great dependence makes it susceptible to problems with agriculture and changes in supply and demand. Ethiopia frequently experiences drought and has very poor cultivation methods. Because Ethiopia relies so heavily on coffee for export revenue, these problems can greatly decrease the revenue they gain from coffee exports, emphasizing its status as a developing nation (World Bank).
2. Historical Background
The majority of developing nations in Africa were once colonies of developed countries for major periods of time. However, this is not true of
Ethiopia. Ethiopia held on to its freedom except for a short period when it was occupied by the Italians. While colonization hurt many developing nations,
Ethiopia’s development was hindered due to other reasons. Ethiopia was ruled by a military junta from 1974 to 1991, who established a social state. Throughout
those years, Ethiopia faced many uprisings, drought on a very large scale, and major problems with refugees, which Ethiopia could not afford to support. This regime hindered Ethiopia’s ethnic growth and development due to the corruption in the government and its inability to deal with Ethiopia’s numerous problems,
instead increasing Ethiopia’s debt and hurting development. While Ethiopia has since adopted a constitution, the government is still focused on border
conflicts with neighboring Eritrea and diverts money that could be used for development to troops fighting and protecting the borders (CIA).
3. Per Capita Income Levels
Ethiopia’s GDP per capita at purchasing power parity (PPP), the total of all economic activity in a country divided by the total number of the
population that attempts to equate the purchasing power of currencies in different countries, is $1,108.90 (current international $) (World Bank).While a
low GDP per capita at PPP is pretty standard in developing nations, Ethiopia has one of the lowest GDP per capita at PPP’s in the world. This depicts that people
in Ethiopia have very little income, if they are even able to work. Such a small income most likely means that Ethiopians are unable to save their money because
they need to spend it immediately to help their families. Saving money would help get them out of the poverty cycle because they would be able to afford to send their children to school and provide better sanitation for their family, among other things. These would lead to economic development because a better
education and health can lead to increased life expectancy and increased productivity, which would also help with economic growth, and would hopefully
increase the standard of living overall. However, Ethiopia’s low incomes do not allow for this to occur in the majority of people, so Ethiopia remains a
developing nation.
Growth vs. Development
In Ethiopia, as in the rest of the world, there is a difference between economic growth, an increase in the real output of Ethiopia’s economy over time, and economic development, an increase in standard of living for the population as a whole, which would include things like improving the provision of education, healthcare, and increasing infrastructure. Ethiopia is experiencing economic growth at the moment, depicted by the growth of its GDP from 26.6 billion (current US $) in 2010 to 30.2 billion (current US $) in 2011, although it did experience a decrease in GDP from 2009 to 2010 (World Bank).
However, while an increase in GDP may lead to economic growth, not all of that growth is being translated into economic development and being used to help the citizens of Ethiopia. An increase in GDP should mean that the government collects more in tax revenue and should therefore be able to provide more
essential services to its citizens, like health care and education, but this is only true if the government decides to spend that extra revenue on those services that will help their country develop. The fact that the government is not doing everything in its power to help the country develop is portrayed through Ethiopia’s low HDI of 0.363, which places it in the low development category (Human). However, some areas concerning economic development are improving as a result of the increase in economic growth despite the low HDI value and ranking. For example, Ethiopia has made improvements in infrastructure as shown by the increase in the percentage of the rural population with access to water from 29% in 2006 to 34% in 2010 (World Bank). This not only helps people become healthier, but by allowing people to spend less time in their day trekking to find a water source and worrying about obtaining water for one’s family, people can spend more time on education and increasing their awareness of health related topics, which will increase development and continue to benefit generations to come. Life expectancy in Ethiopia has also increased from years past and is currently 59 years of age (World Bank). This portrays that the Ethiopian government is using some of that growth to provide health and educations to its citizens because people are making healthier, more informed decisions and receiving better health care, enabling them to live
longer.
In order for Ethiopia to increase economic development, more of the monetary benefits from Ethiopia’s economic growth need to be used for the
provision of essential services and less for the government’s other interests.
In Ethiopia, as in the rest of the world, there is a difference between economic growth, an increase in the real output of Ethiopia’s economy over time, and economic development, an increase in standard of living for the population as a whole, which would include things like improving the provision of education, healthcare, and increasing infrastructure. Ethiopia is experiencing economic growth at the moment, depicted by the growth of its GDP from 26.6 billion (current US $) in 2010 to 30.2 billion (current US $) in 2011, although it did experience a decrease in GDP from 2009 to 2010 (World Bank).
However, while an increase in GDP may lead to economic growth, not all of that growth is being translated into economic development and being used to help the citizens of Ethiopia. An increase in GDP should mean that the government collects more in tax revenue and should therefore be able to provide more
essential services to its citizens, like health care and education, but this is only true if the government decides to spend that extra revenue on those services that will help their country develop. The fact that the government is not doing everything in its power to help the country develop is portrayed through Ethiopia’s low HDI of 0.363, which places it in the low development category (Human). However, some areas concerning economic development are improving as a result of the increase in economic growth despite the low HDI value and ranking. For example, Ethiopia has made improvements in infrastructure as shown by the increase in the percentage of the rural population with access to water from 29% in 2006 to 34% in 2010 (World Bank). This not only helps people become healthier, but by allowing people to spend less time in their day trekking to find a water source and worrying about obtaining water for one’s family, people can spend more time on education and increasing their awareness of health related topics, which will increase development and continue to benefit generations to come. Life expectancy in Ethiopia has also increased from years past and is currently 59 years of age (World Bank). This portrays that the Ethiopian government is using some of that growth to provide health and educations to its citizens because people are making healthier, more informed decisions and receiving better health care, enabling them to live
longer.
In order for Ethiopia to increase economic development, more of the monetary benefits from Ethiopia’s economic growth need to be used for the
provision of essential services and less for the government’s other interests.