Ethiopia’s Growth Acceleration and How to Sustain It : Insights from a Cross-Country Regression Model

Moller, Lars Christian ; Wacker, Konstantin M.

World Bank, Washington, DC

关键词: ECONOMIC BOOM;    FORECASTS;    GROWTH RATES;    MONETARY POLICY;    GOVERNMENT EXPENDITURES;   

DOI  :  10.1596/1813-9450-7292
RP-ID  :  WPS7292

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

Ethiopia has experienced a growthacceleration over the past decade on the back of an economicstrategy emphasizing public infrastructure investment andsupported by heterodox macro-financial policies. To analyzethe country’s growth performance during 2000–13, the paperemploys a neoclassical cross-country System GeneralizedMethod of Moments regression model. The analysis finds thataccelerated growth was driven by public infrastructureinvestment and restrained government consumption, andsupported by a conducive external environment. Macroeconomicchallenges arising from declining private credit, realcurrency overvaluation, and relatively high inflation heldback some growth. The model accurately predicts Ethiopia’sgrowth over the period of analysis and is robust tocountry-specific parameter heterogeneity and alternativeinfrastructure variables. Looking ahead, model simulationsunder alternative policy scenarios are indicative thatgrowth may decelerate in the coming decade, making itchallenging for Ethiopia to attain its middle-income countrytarget by 2025. Although simulated growth rates do not varymuch by policy scenario, the paper discusses some of theemerging risks associated with a continued reliance on thecurrent infrastructure financing model and potential future adjustments.