Tuffa, Adane (PhD)Simesh, Getaendale2018-07-162023-11-042018-07-162023-11-042015-06http://etd.aau.edu.et/handle/123456789/8724This study tries to investigate the effect of agricultural productivity on the industrial sector and further its effect on the structural transformation of the Ethiopian economy. Inspired by the works of Matsuyama (1992) on agricultural productivity and industrialization we tried to see effect of agricultural productivity from a microeconomic perspective. Using a panel data from Ethiopian rural households which is conducted from 15 rural villages in four rounds with a time span of 15years (i.e. 1994, 1999, 2004 and 2009) we tried to link the agricultural sector with the industrial sector. Taking labor participation on farm activities and the consumption share of manufactured products as dependent variables we develop two independent models considering agricultural productivity as a major explanatory variable. A Housman test is conducted in order to select the appropriate effect (i.e. Random and Fixed models) for the panel model and further tests are also conducted to check validity of the model. An almost ideal demand system is also employed in order to see the consumer’s elasticity of demand towards manufacturing products. From the results it was found that development of the agricultural sector is found to be insignificant in making progress for the industrial sector. Furthermore, its role for the realization of a structural transformation of the economy is found to be unfortunate.enEconomicsEconomic ResourceThesis