Clustering, which he explains is a method of capturing the positive externalities produced through technological development, is a process whereby “the creation of new knowledge by one actor is not only diffused to others, but also becomes the basis for additional knowledge. Such externalities cannot be adequately captured by the market” (Zenawi, 2012).
Today my internship friend brought me some freshly picked herbs from the garden in front of her house. It’s the plant commonly steeped in your US $0.25-0.50 Ethiopian coffee, served in an espresso-sized china cup that reminds me of something you’d find at grandma’s house. I got buna (coffee), shai (tea), and lunch on three separate outings today. These impromptu “meetings” are the most pleasant form I’ve ever experienced in a workplace.
Yom Institute for Economic Development (YIED) is an institute for training, research and consulting. It was founded a few years back by a group of Ethiopian economists who received PhD’s abroad, mostly in Germany, and then came back to Ethiopia. Many of their former colleagues and classmates now teach in American universities, but from what I understand, Ethiopia is their home, and they feel a certain obligation to share their knowledge and enhance the capacities and skills of people here in Ethiopia. Yom takes a multi-faceted approach to economic development, which includes field work, project management, consulting, and human capital development through academic training and joint-university degrees. They are also one of, or the first, to create a post-doctorate program for Ethiopian economists and project managers. They are a spirited and dynamic bunch that are open to engaging in a wide variety of development initiatives.
economics: industrialization and Ethiopia’s case
Ethiopia has been one of the most rapidly growing economies in the world in the past 15 years. Ethiopia has been secure from many international financial and commodity shocks due to a closed financial sector (there are currently no international banks operating in Ethiopia), and a non-natural resource centered economy (they are not reliant on oil, for example, so have not experienced major shocks induced by international price fluctuations, as some other developing countries have). Growth has also been attributable to policies implemented through a state-led development regime under former PM Zenawi. The success of the Asian Tigers’ state-led development regimes (South Korea, Hong Kong, Taiwan and Singapore), have inspired shifts in industrial, trade, and agricultural policy, in a push for industrialization and structural transformation. Industrialization, or the transition to more capital-intensive production methods, has been accepted as a method to increase the wealth of a nation and to promote job opportunities for the masses. This widely accepted capitalist narrative includes a process of proletarianization, or the bringing of non-capitalists, often rural or indigenous, into the realm of capitalist production. The transition from subsistence living to the proletariat often causes cultural, social, economic, and intergenerational tension. Opportunities for those in transition are not always accessible, labor standards are often compromised by firms struggling to compete, and in certain cases, devastating human rights violations become a tradeoff for economic growth.
There are some contentious contradictions in Ethiopia’s economic policy, especially with regards to the push for agriculture-led industrialization. On one hand, there is a push for commercialization of small-scale farmers through technology distribution, training, and market access. There are many structures, like local farming schools and access to credit, that aim to provide assistance and stability to small-scale farmers. Yet, on the other hand, the Ethiopian government (which owns all of the land) leases large plots to international commercial producers (which often involves dispossession of more vulnerable populations). I haven’t done enough research on this to say for sure, but I imagine these larger scale producers are influencing pricing and trade policy in a way that crowds out smaller producers, diminishing the potential for factor price and profit equalization, as predicted in mainstream theory. Another possibility is that import liberalization (one of the neoliberal policy recommendations that Ethiopia has stuck with over the years), or the free flow of goods into the country, promotes competition and learning from technology and processes brought by international firms.
This raises the questions of whether policy is focused more on growth or development? In short, is there more of a focus on increasing national GDP, or on ensuring improved livelihood for the masses? Is there really a focus on improving possibilities for the 85% involved in small scale agriculture, or is policy oriented toward big business? Industrialization can include growth and development, if an emphasis is placed on equity between large-scale and small-scale, between urban and rural, between genders, and when value is placed on inclusion and sustainability.
Unfortunately for Ethiopia and its 85% agricultural population, no country has ever industrialized, or achieved structural transformation, on the basis of agriculture output and export alone (Stiglitz). So, in order to guard small scale farmers against the ills of industrialization, as well as drastic agro-climate change induced both by shifting weather patterns and anthropogenic deforestation and soil erosion, civic actors have played a leading role in Ethiopia.
Similar to the role of the government in the case of market failures, NGO’s and private institutions can step in where government policy fails. YIED, through educational opportunities and project management, operates in this space. Rather than relying on the questionable alliances of federal government, the project I am working on aims to preserve knowledge and methods of farmers who have been effectively dealing with agro-climate changes with “climate-smart” production methods, such as agroforestry, crop rotation, and irrigation. We are currently in the proposal phase, but if awarded funding, the project would run for three years, offering a platform for knowledge sharing between farmers, as well as information for researchers and local governments to understand the unique challenges being faced in different agro-ecological zones in Ethiopia. Unlike many projects and pilots done in “developing countries”, this method is sustainable, as knowledge and support networks would remain in place after the project ends. Further, data collected will provide a deeper understanding into the ways that adaptation of certain climate-smart methods can improve livelihoods through output, resilience to climate change, and land preservation for the future. Through climate-, output-, and ecologically-specific clusters of farmers, we will be able to capture and spread some of the positive externalities of local knowledge and technology, and create meaningful change for those who would not have had access to it.
My internship friend is actually a masters student in agricultural sciences, and is contributing to her thesis through primary qualitative research on the bamboo industry in Ethiopia. I have been invited on her field visits so have gotten a chance to learn a bit about the bamboo supply chain in Ethiopia, the benefits that SME (small-medium enterprises) receive from the government, what unique challenges they face in the industry, and how it has changed in the past 10-15 years. A major challenge faced is lack of knowledge and training amongst bamboo producers, contributing to a lack of understanding of the best time of year/in the plant’s lifecycle to cut the bamboo, and over-harvesting. Mistakes lead to less output, revenue, detrimental environmental impacts, and have encouraged a boom in an insect population. This finding provides legitimacy to our project on knowledge sharing.
I also am working to design a small primary research project of my own while I am here. Maybe I can link up with a student and continue the project or publish something even after I return home. The energetic resources in the office are inspiring and encouraging, projects are kept moving and ideas flowing, with seemingly few boundaries placed on what is possible.