Rostow model

• Rostow's model


  A model that can help determine a country's path of economic development
• Ethiopia has been rapidly industrialising since 2010, being one of the fastest growing economies in the world at 10.9% growth
• Rapid economic development has occurred in Ethiopia due to having one party with firm control of the country, allowing fast-forwarding of economic growth
• Ethiopia aims to become an Economically Developed Country (EDC) by 2025
• Ethiopia's landlocked location


  • It is a potential barrier to international trade as it costs money to transport goods via the sea port in neighbouring Djibouti
  • The government has been investing in transport infrastructure on a par with China to overcome its landlocked location
• Ethiopia's exports


  • Mostly low value primary goods like rain-fed agriculture, coffee, oil seeds, gold
  • Key export markets are Switzerland, China, United States, Netherlands, Saudi Arabia, Germany
• Ethiopia's imports


  • Mostly high value technology, machinery, manufactured goods, energy and components
• Ethiopia has a major trade deficit, with imports (45% of which are technology and machinery) much greater than low value exports
• Ethiopia's trade balance is -8% of GNI, in contrast to China's trade surplus of 1% of GNI
• In 2013, only 12-15% of Ethiopians had access to electricity, and only 2% of the rural population
• Infrastructure and energy will be essential for Ethiopia to maintain economic growth and reach EDC status
• Future challenges facing Ethiopia

  • Developing the renewable energy sector
  • Investing in large-scale commercial farming
  • Growing small-scale African businesses
  • Building human capital through education and skills
  • Raising taxes on goods (VAT)
• Risks to Ethiopia's economic growth

  • Tigray civil war
  • Falling global demand for raw materials and global economic recession
  • Overdependence on hydroelectric power
  • Withdrawal of aid donor support
  • Vulnerability to climate change and drought