Economic Development Process in Ethiopia

Running head: ECONOMICS
Economic Development Process in Ethiopia
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ECONOMICS
Abstract
Ethiopia is the second populous country in the African continent and it is also one of the poorest
nations, with per capita income of $783. The HDI of Ethiopia is also very poor, 0463, ranking
the nation 173 out of 189 countries. This report explores the process of economic development
for Ethiopia with respect to human development index, poverty, GNI per capita and GDP. It also
illustrates the comparison of the nation with two other low income countries of Africa, that is,
Rwanda and Uganda and it has been seen that in the past 2 decades the poverty has declined and
quality of life has improved due to increase in FDI in the industrial sector and manufacturing.

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ECONOMICS
Table of Contents
1. Introduction..................................................................................................................................5
2. Process of economic development...............................................................................................5
2.1 Human Development Index (HDI) of Ethiopia.....................................................................6
2.2 Head Count Ratio (HCR) and poverty.................................................................................10
2.3 Factors driving growth.........................................................................................................11
3. Performance trend of Ethiopia...................................................................................................12
4. Conclusion.................................................................................................................................12
References......................................................................................................................................14

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ECONOMICS
1. Introduction
Economic development process is a broad aspect which includes the not only the growth
in output but also the overall improvement in the fields of social and political well being of the
residents of a nation. As stated by Schumpeter (2017), economic development is a procedure that
encompasses both the economic growth and the welfare values of the people. Thus, under
economic development, along with economic growth indicators, such as, GDP, GDP per capita,
population growth etc., the Human Development Index (HDI), per capita GNI and other welfare
indicators are also evaluated to understand overall growth of a nation. As stated by Amartya Sen,
economic growth is a particular aspect under the economic development process (Osman &
Kavale, 2018). The report also aims to explore and evaluate the aspects of economic growth and
economic development in Ethiopia and also make an inferential study on why the nation
performed in a certain manner over the past decades.
2. Process of economic development
As stated by Platteau (2015), economic development is a broad process that takes into
consideration large number of factors that encompass different aspects of growth and welfare of
the communities. Economic development is attained through the improvement and efficient
utilization of natural resources, human resources, capital resources, technology and institutional
environment. It is a two way relationship as in one way economic growth helps in improving the
development of life and in other way, the income level increases which benefits the economic
process through increased consumption, expenditure, education, health and infrastructure (Van
den Berg, 2016).