The Growth of Industrial Manufacturing in Ethiopia and its Contribution to GDP.
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Date
2007-03
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A.A.U
Abstract
This paper analyses growth of Industrial Manufacturi ng in Eth iopia and its contribut ion to (inp
over the past 4 and 311 Olh decades, [n general. industriali za ti on plays an il11portant ro le in
econol11ic developl11en t. In th is regard, the rnanuJ~lcturin g sector plays the key ro le ill growth
process, Despi te the il11portancc of industriali zation in Sustainable Econol11ic Growth. the sector
has encountered with a serous growth problel11 that leads to insigniJi ca nt contribution to ( jUP,
due to J'inancial constraint , shortage of supply raw materials and lack of skilled l11anpower.
The genera l objective of thi s study is to exal11i ne the growth of the sector and its contribution to
GOP, using Secondary data frol11 the NEE and C.S,A, which covers 43 years, The study el11ploys
the methodology of Johansen cointegration analys is of Economctric Time- series models, 'I (l
identify the effect of various factors deterl11 ining the growth of the sector, the FIML procedures
are el11ployed instead of OLS or 2SLS regressions, because it provides a worthwhile l11easure to
generate more etTicient and elTective esti l11ates that explain the relationships, These techniques
are used to validat.e the theoreti cal assertion that th ere is one cointe g r~lting relations in th is study ,
The anal ys is indicates that the long-term growth rate of inVestment is posit ively relalcd lei tilL'
weight placed on growth of the sector and is playing significant role in e-x panding its activitil's,
While lhat of labor engaged in production, is the short-run effect and hence, the sector is
ch3racterized as labor intensive, In the meantil11e, the sector grol;1h is negatively inlluenced by
tota l factors of production that represent the obsolete uses technologica! IeI'd in m<lnu filuuring
activities accounts for the sec tor's stagnant growth, That is why tire overall growth rate of sec tor
is negl igibl e, on ly about 0,24 percent per annum, In tCll1lS of coillribut ioll, ,he share ot' tire see tor
acco unts about 6 percent to GDp, That is, almost about 1111111 of Agriculture anci \l61h 01' Service
secto r. 011 average since 196:2,
From these ana lyscs, th ercfore, it would be probably dralVn th<lt the growtlr and the role of
industrial seC lor in Eth iopian economy is in significant. implies, the level of il1du st rialization is
very low, Thus, the policymakers would focus on the illlpli eati\)l1s or this pilper to nlil igatc tire
problem and achi eve the d es ign~d goal of Sustainable Economic Growth ,
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Keywords
Manufacturing Growth, Contribution to GDP.