Latent Advantage,Complex Challenges: Industrial Policy and Chinese Linkages in Ethiopia's Leather Sector

This paper assesses Ethiopia's industrial policies and engagement in the leather industry

Abstract

Industrial policy is back on the African policy agenda, with a number of countries following new strategies for rapid industrialization. None have done so more eagerly than Ethiopia. In the present paper, published in the China Economic Review, the authors Brautigam framework of New Structural Economics to assess Ethiopia’s industrial policies and engagement in the leather industry.

Making use of two rounds of semi-structured interviews with all of the foreign firms and more than a dozen local firms in the leather sector, as well as other key stakeholders, the authors examine 7 steps the government took to build the industrial policy:

  1. create a high-level focus on the sector;
  2. make strategic use of international development partners;
  3. attract a “lead goose” (Chinese) in the foot wear sector;
  4. build government capacity to support the sector;
  5. strengthen business associations;
  6. “shock-to-shape” upgrading;
  7. improve input supply.

Ultimately, while government interventions have led to improvements across several steps of the value chain, they identify a number of factors that have prevented the country from fully realizing a latent comparative advantage in the leather sector.

This research was funded under the Private Enterprise Development in Low Income Countries (PEDL) Programme

Citation

Brautigam, D., Weis, T. and Tang, X. (2016) “Latent advantage, complex challenges: Industrial policy and Chinese linkages in Ethiopia’s leather sector. China Economic Review.

Latent Advantage,Complex Challenges: Industrial Policy and Chinese Linkages in Ethiopia’s Leather Sector

Published 1 June 2016