GT2 Diversi cation of Areas

2022/2023
and Actors Involved

in Economic Production
I. Case Study : Ethiopia, a New « World Factory ».

Document Based Question

Skill : Conduct a critical analysis of a source based on a geographical approach.

Sources :

1. China Global Television Network (CGTV), « Chinese companies boost Ethiopian manufacturing industry », April 27, 2016, available at https://www.youtube.com/watch?v=h6qg5yEzLT8

2. World Bank, « country pro le (Ethiopia) », available at https://data.worldbank.org/country/ethiopia?view=chart

3. Bloomberg, « China Is Turning Ethiopia Into a Giant Fast-Fashion Factory », March 2nd, 2018, available at https://www.bloomberg.com/news/features/2018-03-02/china-is-turning-ethiopia-into-a-giant-fast-fashion-
factory

4. Ethiopian Investment Commission, « Why Invest in Ethiopia ? », available at https://www.investethiopia.gov.et/index.php/why-ethiopia/why-invest-in-ethiopia.html

5. Foreign Policy, « The Dark Side of Ethiopia’s Export Boom », September 24, 2022, available at https://foreignpolicy.com/2022/09/24/ethiopia-export-boom-garment-workers/

Instruction : Basing yourself on source 1 and additional information from the corpus, assess Ethiopia’s strategy to incorporate the Global Value Chain and become a new « world factory ».

Follow the procedure detailed below :

1°) Make a formal presentation of source 1 (source type, author , date) and put it in context using source 2

2°) Show how source 1 emphasizes the success of Ethiopia’s industrial strategy under China patronage

2°) Using corpus sources 3 to 5 explain Ethiopia’s strategy to boost the country’s industrial development and its limitations.

Critical Analyis in a free format (text, mindmap ,…)

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 GT2 Diversi cation of Areas
This drought-a icted, landlocked country of 100 million on the Horn of Growing Economy : 2022/2023
and Actors Involved
Africa is transforming itself into the lowest rung on the supply chain that pours - An average of about 11% annual GDP growth for the last 14 years. The
in Economic Production out fast fashion and ve-for-$12.99 tube socks. Lured by tax incentives, fastest-growing economy in the world during the same period (World
promises of infrastructure investment, and ultracheap labor, countries the Bank Global Economic Prospects)

Western world once outsourced production to, particularly China and Sri Lanka, - 46% growth in Foreign Direct Investment (FDI) in ow, one of the most
are now the middlemen ramping up production here for Guess, Levi’s, H&M, dynamic and largest FDI recipients in Africa (UNCTAD World Investment
and other labels. These industrialists like Ethiopia because the government Report, 2017)

wants them as much as they want cheap labor and tax breaks. The Hawassa - Ethiopia is ranked 57th, better than its regional peers (Kenya, Rwanda and
Industrial Park’s inauguration is only the most recent part of a vast centralized South Africa), for its conducive macroeconomic environment (World
scheme: Since 2014, Ethiopia has opened four giant, publicly owned industrial Economic Forum, Global Competitiveness Report, 2017-2018)

parks; it plans eight more by 2020.

Young and Trainable Labor Force :
- Ethiopia’s labor law, which regulates worker-employer relations, is in line
The industrialists who set up shop here are exempt from income tax for with international conventions.

their rst ve years of business and absolved from duties or taxes on the import - Ethiopia is the second-most populous country on the continent with 60%
of capital goods and construction supplies. Ethiopia can swing such largesse of the population in the labor force

because it gets lots and lots of money from China: $10.7 billion in loans from - Ethiopia has a young and trainable labor force (median age of 19) and a
2010 to 2015, supportive government policy that facilitates labor sourcing for industries.

Source 1 : China Global Television Network (CGTV),

according to the Regional Hub with Access to a Wide Market
« Chinese companies boost Ethiopian manufacturing
industry », April 27, 2016,
China-Africa - Addis Ababa has emerged as a regional hub and is home to key
Research Initiative at international organizations such as the African Union (AU) and the
the Johns Hopkins UNECA, and the UNDP.

University School of - Addis Ababa is also the main aviation hub for Africa and the home of
Advanced Ethiopian Airlines, which has won repeated recognition as the best airline
International Studies. in Africa.

Right now much of - Ethiopian products have duty-free, quota-free access to a wide market,
the money is being including major markets such as the USA, and the EU:

spent on lucrative • Large domestic market of over 100 million consumers,

contracts for • COMESA (Common Market for Eastern and Southern Africa), with 19
Chinese companies member countries and over 400 million people

that, with help from • AGOA (African Growth and Opportunities Act) and GSP (Generalized
Ethiopian labor, are System of Preference) of the United States Government initiatives, and

building dams, • EBA (Everything But Arms) of the European Union

roads, and cellular Source 4 : Ethiopian Investment Commission, « Why Invest in Ethiopia ? »
networks. This
infrastructure, the
Inaugurated the $250 million, 300-hectare Hawassa Industrial Park
Ethiopian
that the government hoped to transform and expand the country’s economy.
government says,
It was a bold social and economic experiment with big ambitions: to make
will allow the country
Ethiopia the new link in the global supply chain for Western apparel.The
to join the global
African Growth and Opportunity Act (AGOA), a U.S. initiative in place since
middle class. “The
2000, was a major reason why Hawassa Industrial Park was set up in the
plan is to create a
rst place. AGOA enabled duty-free access to the U.S. market for almost all
total of 2 million jobs
of Ethiopia’s exports, including ready-made garments. In 2020, Ethiopia’s
in manufacturing by the end of 2025,” says the Ethiopian Investment
exports to the United States under AGOA totaled $238 million, of which
Commission’s Belachew Mekuria. “We are an agrarian nation now, but that will
$219 million were from the garment industry.

change.”

For a country to qualify and remain eligible for AGOA, it must be

working to improve its rule of law, human rights, and respect for labor
If there isn’t a civil war rst. At the Summer Olympics in Rio de Janeiro
standards. In late 2021, Mali, Guinea, and Ethiopia were terminated from
in 2016, marathon runner Feyisa Lilesa drew the world’s attention to a crisis
AGOA over alleged human rights abuses and coups. On Nov. 2, 2021, the
brewing in his country. As he crossed the nish line to win silver, he raised his
U.S. government announced it was deeply concerned “by the gross
arms in an “X”—an antigovernment symbol. Feyisa belongs to the country’s
violations of internationally recognized human rights being perpetrated by
largest ethnic group, the Oromo. Since 2015 the Oromo have been staging
the government of Ethiopia and other parties amid the widening con ict in
mass protests to decry, among other things, what they say are land grabs from
northern Ethiopia.” The Biden administration gave Ethiopia two months to
farmers for an autocratic government’s planned factories. The Ethiopian
meet the eligibility criteria, but it failed to do so.

People’s Revolutionary Democratic Front (EPRDF) controls every seat in

The suspension, which came into e ect in January, sent shock
Parliament and claims to represent all of Ethiopia’s 70-plus ethnic groups, but
waves through the industry. Two weeks after the announcement, PVH [one
its power is largely held by the Tigray, who constitute only 6 percent of the
of the world’s largest apparel companies, which owns Calvin Klein and
population. In the years of unrest, hundreds of Oromo have died, factories have
Tommy Hil ger].declared its intent to terminate its operations at Hawassa,
been burned, and many dissidents have been imprisoned.

citing the “speed and volatility of the escalating situation.” Some other
companies have followed suit. It was a major blow to Ethiopia’s desire to
Source 3 : Bloomberg, « China Is Turning Ethiopia Into a Giant Fast-Fashion become a serious player in the global apparel industry.

Source 2 : World Bank, « country pro le (Ethiopia) » Factory », March 2nd, 2018,
Source 5 : Foreign Policy, « The Dark Side of Ethiopia’s Export Boom »,
September 24, 2022
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