Ethiopia - Toward the Competitive Frontier : Strategies for Improving Ethiopia’s Investment Climate
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World Bank
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The productivity and investment climate
survey suggests that the perceptions managers have of the
investment climate in Ethiopia has improved dramatically
since the first investment climate survey in 2001-2002. The
share of managers and owners who report being constrained by
the investment climate, defined as the
'location-specific factors that shape the opportunities
and incentives for firms to invest productively, create
jobs, and expand' in the 2005 World development report,
was extremely high for almost all measured variables in the
2001 survey. Five years later, the share of complaining
firms has declined to the point that Ethiopia performs more
favorably than the low-income international averages.
Despite serious economic challenges that became more acute
after the survey was completed, the long-term trend is
clearly toward improvement. The paper focuses on
productivity because differences in productivity explain
differences in income between countries, and attracts new
investment. When firms become more productive, they are able
to offer a product more likely to meet the quality and cost
requirements of foreign markets. They are able to pay higher
wages, employ more workers, and the profitability will
attract more investment. Developing a private sector that is
able to fulfill its development role requires solutions to
three challenges: the challenge of productivity and growth,
the challenge of inclusion, and the challenge of formalization.
Palabras clave
ADVERSE EFFECT, AGRICULTURE, ALLOCATIVE EFFICIENCY, ASSET PRICES, AVERAGE PRODUCTIVITY, AVERAGING, BALANCE OF PAYMENTS, BANK, BANKING, BANKING SECTOR, BANKING SECTOR REFORMS, BARRIERS, BARRIERS TO ENTRY, BID, BUSINESS ENVIRONMENT, CAPITAL BASE, CAPITAL FORMATION, CAPITAL INVESTMENTS, CENTRAL PLANNING, CIVIL WAR, CLEAN WATER, COLLATERAL, COLLATERAL REQUIREMENT, COMMERCIAL BANKS, COMMODITIES, COMPARATIVE ADVANTAGE, COMPETITION POLICY, COMPETITIVENESS, CONTRACT, CONTRACTING, CONTRIBUTION, CREDIBILITY, CREDIT BUREAU, CREDIT BUREAUS, CRITICAL MASS, CURRENCY, CURRENCY SHORTAGES, DEBT, DEFAULT, DEFICIT, DEFICITS, DEMAND, DEVELOPMENT, DEVELOPMENT STRATEGY, DIRECTED CREDIT, DIVERSIFICATION, DOMESTIC BANKS, DOMESTIC MARKET, DROUGHT, ECONOMETRIC MODELS, ECONOMIC ACTIVITY, ECONOMIC GROWTH, EDUCATION, EFFECTS, EFFICIENT MARKET, EMPLOYMENT GROWTH, ENTERPRISE PERFORMANCE, EQUIPMENT, EXCHANGE, EXCHANGE RATE, EXPENDITURE, EXPENSE, EXPORTER, EXPORTERS, EXPORTS, EXPOSURE, EXTERNAL FINANCE, EXTERNAL TRADE, FACTOR MARKETS, FARM INCOME, FEMALE ENTREPRENEURS