Page 75 - Azerbaijan State University of Economics

Abrehet Mehari: Factors Affect The Productivity of Large And Medium -Scale
Manufacturing Industry In Ethiopia

INTRODUCTION

Ethiopia has achieved sustainable and inclusive economic growth during the last
fifteen years, resulting in infrastructure development, improved education, and major
progress in the industrial sector. The country has designed a Gross and
Transformation Plan (GTP I and II) to achieve the country's long-term national vision
of industrialization and structural transformation (FDRE 2010;Abrehet,2020). The
GTP II set objectives to consolidate and further develop infrastructure focus on
agricultural development as the basis of fast economic growth, emphasizing the need
to increase productivity and promote the industrial sector as a leading sector, and
manufacture goods to double export (%GDP) 5% (2015) to 18% (2025) and agro-
processing (%GDP) - to 3.39 in 2020 and industry form 15% in 2015 to 28% by 2025.

In this regard, the emphasis is given to the manufacturing sectors based on resource
availability, labor intensity, linkages to agriculture, export potential, and low
technological entry barriers. The priority sectors identified in these strategies are Leather
and leather product, textile and Garment, Wood and Metal Products, Agro-Processing,
Mineral, and Mineral products (NPC 2016). Subsequently, the economic productivity
helped sustain its growth with an average GDP growth rate of 10.1 percent from 2010-
to 2014(NPC 2016).However, the Ethiopian economy is still subject to structural
problems.Compared with other undeveloped countries, the base of Ethiopia's
manufacturing sector remains insignificant (Haile, 2017). The industry sector in general
and the manufacturing sector have a limited share in terms of production, employment,
exports, and inter-sectoral linkages (AACCSA, 2014 and Arkebe, 2018).

The manufacturing sector to the gross domestic product was only about 6.4 % in
20018 (NBE, 2018). Its share to GDP is still lower than the sub-Saharan African
average which is nearly 10% (Signe, 2018). Though the share of the manufacturing
sector is showing slight improvement over time, the service and agriculture sectors
are still dominant, constituting about 39% & and 35 % of the country’s gross value
added, respectively (NBE, 2018). However, GTP I have placed the top priority to
accelerate and integrate the manufacturing industry to create jobs and lift workers
from low-productivity agriculture into higher-productivity areas (Cheru 2014).

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