Agriculture and Economic Growth in Ethiopia: Growth Multipliers in a Four-Sector Simulation Model
Author(s)
Block, Steven A.
Abstract
Agriculture accounts for over half of Ethiopian GDP, yet the case for agriculture as a focus of economic growth strategies must rely on identifying a set of intersectoral linkages through which agricultural growth contributes to the growth of non-agriculture in the Ethiopian economy. Poverty in Ethiopia is disproportionately rural. An income shock to agriculture is clearly the most progressive choice, indicating the need to highlight agricultural development in growth strategies for Ethiopia. Yet, the simulation results further indicate that doing so imposes relatively little trade off against total benefit. While a $1 service sector income shock generates $0.80 in indirect benefits, a $1 agricultural income shock still generates $0.54 in indirect gains – a somewhat smaller benefit, but one likely to make the greatest possible impact on poverty reduction.
