AMBO UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF ECONOMICS

DEVELOPMENT PLANNING AND PROJECT ANALYSIS I ASSIGNMENT

Summited to. Tilhun.

Ambo,Ethiopia
Dec,2023

1. Ethiopia was prepared economic development program called ‘ADLI’ since 1993

1.1. What is Agricultural development leads to Industrialization (ADLI)?

The Agricultural Development Led Industrialization (ADLI) is a comprehensive economic

development program implemented by the government of Ethiopia starting in 1993. The primary focus
of ADLI is to facilitate economic growth by leveraging agriculture as a driver for industrialization and
overall development. This program, designed to harness the potential of Ethiopia's agricultural
resources, aims to create a solid foundation for industrial expansion and broader economic
development. By focusing on agricultural growth as a catalyst for industrialization, ADLI emphasizes
the crucial role of the agricultural sector in driving overall economic progress. This strategy aligns with
a broader economic transformation agenda aimed at elevating Ethiopia toward becoming a middle-
income country.

Key Objectives:
 Agricultural Transformation: ADLI aims to enhance agricultural productivity, rural development,
and food security as a means to spur overall economic growth.
 Industrial Growth: The program aspires to foster the development of manufacturing and industrial
sectors by utilizing the surplus from agriculture and agricultural-led investment to fuel
industrialization.
 Infrastructure Development: ADLI emphasizes the need for infrastructure development,
particularly in rural areas, to support both agricultural and industrial growth.
 Macroeconomic Stability: The program also includes measures to ensure macroeconomic stability
and promote a conducive environment for sustainable economic development and investment.

Core Components of ADLI:

 Market-Oriented Farming: Promotion of market-oriented farming practices to improve
agricultural productivity and uplift rural communities.
 Value Addition: Encouragement of activities aimed at increasing value addition and processing of
agricultural produce to develop agro-industrial activities.
 Infrastructure Development: Investment in infrastructure, including irrigation, roads, and
electrification, to support agricultural and industrial growth.
 Policy Reforms: Implementation of policy reforms to create an enabling environment for
industrial development and investment.

Impact and Criticisms:

While ADLI has contributed to some improvements in agricultural productivity and rural development,
its achievements have been subject to various criticisms and evaluations. Some assessments emphasize
the need for comprehensive policy adjustments to further align the program with equitable, sustainable,
and inclusive growth objectives.

Conclusion: Overall, the ADLI program represents a unique approach to economic development,
focusing on leveraging the agricultural sector as a catalyst for national industrialization and broader
economic progress.

1.2. What are the major objectives of ADLI?

The major objectives of the Agricultural Development Led Industrialization (ADLI) program in
Ethiopia are centered around leveraging agricultural growth to bring about broader industrial, economic
development and reducing poverty, enhancing industrial development, and ensuring a dynamic and
self-sustaining growth.

Additional
 Agricultural Transformation: Focusing on enhancing agricultural productivity, rural
development, and food security as a means to spur overall economic growth.
 Industrial Growth: Aiming to foster the development of manufacturing and industrial sectors
through the utilization of agricultural surpluses and investments to propel industrialization.
 Infrastructure Development: Emphasizing the need for infrastructure development, particularly
in rural areas, to support both agricultural and industrial growth.
 Macroeconomic Stability: Implementation of measures to ensure macroeconomic stability and
provide an environment conducive to sustainable economic development and investment.

1.3. What are the limitations of ADLI?

The Agricultural Development Led Industrialization (ADLI) program in Ethiopia, while ambitious and
innovative in its approach, has faced several limitations and criticisms. Some of the key limitations
include:

 Inequitable Benefits: Critics argue that the benefits of ADLI have not been equally distributed
among different segments of the population. The program's impact has been more pronounced in
certain regions and among specific social groups, leading to disparities and potential social
tensions.
 Environmental Impact: The emphasis on increasing agricultural production and industrialization,
while crucial for economic growth, has raised concerns about potential negative environmental
effects, such as deforestation, land degradation, and soil erosion.
 Limited Industrial Diversification: The program's focus on agricultural-led industrialization has
prompted concerns about the limited diversification and transformation of the industrial sector,
often leading to a heavy reliance on limited types of products and industries. This can potentially
hamper the long-term sustainability and resilience of the industrial base.
 Policy Implementation Challenges: Implementation challenges, including capacity constraints,
governance issues, and resource allocation, have impacted the efficient execution of the program's
objectives, potentially affecting the overall impact and reach of the initiatives.

1.4. Do you support or not ADLI plan? Be rational as economics students and put your
opinion with justification.

I support because when we see at Ethiopia:

The ADLI plan in Ethiopia, with its focus on leveraging agricultural growth to stimulate broader
industrial and economic development, presents an interesting and complex case. Here are some key
points to consider in evaluating this plan:

 Agricultural-Led Growth: ADLI emphasizes the critical role that agricultural productivity plays in
driving overall economic development. This approach aligns with the structural transformation
typically seen in the early stages of economic development, where agriculture acts as a
fundamental driver of growth.
 Rural Development and Poverty Alleviation: The program's focus on rural development and food
security has the potential to alleviate poverty and improve living standards for a large segment of
the population. By concentrating on agricultural productivity and rural infrastructure, ADLI aims
to enhance the economic well-being of rural communities.
 Industrialization and Structural Transformation: The plan's objective of using agricultural
surpluses to fuel industrial development aligns with the broader aim of structural transformation
seen in many successful economic development models. Industrialization offers the potential for
diversification, increased productivity, and higher value-added economic activities.
 Sustainability and Equitability: A critical consideration is ensuring that the benefits of the ADLI
plan are sustainable and equitably distributed across various segments of the population. It is
essential to mitigate potential environmental impacts and address any disparities that may arise
from the program's implementation.

2. Ethiopia also prepared Growth and Transformation program (GTP) in 2010

2.1. Write the goal of GTP clearly and take one economic planning prepared in developed
countries and compare with GTP of Ethiopia.

The Growth and Transformation Plan (GTP) of Ethiopia, initiated in 2010, aimed to achieve rapid and
sustainable economic growth, focusing on job creation, infrastructure development, and social welfare
improvements. The plan encompassed various sectors, such as agriculture, industry, and services, with
the goal of propelling Ethiopia toward becoming a middle-income country by 2025.

Comparing the GTP of Ethiopia with the economic planning prepared in a developed country can
provide valuable insights into similar or differing objectives and strategies. For the purpose of this
comparison, let's consider the "Japan Revitalization Strategy" (JRS) implemented in Japan in 2013. The
JRS aimed to rejuvenate Japan's economy and promote sustainable growth through structural reforms,
innovation, and increased competitiveness.

Goals of the GTP:

 Sustainable Economic Growth: GTP seeks to achieve sustained and inclusive economic growth,
transforming the country into a middle-income economy by 2025 through specific annual GDP
growth targets.
 Infrastructure Development: The plan emphasizes the development of critical infrastructure,
including transportation, energy, and telecommunications, to support economic expansion and
inclusive development across the nation.
 Industrialization: GTP focuses on industrialization efforts aimed at expanding manufacturing
capabilities, increasing productivity, technological innovation, and generating employment
opportunities.
 Social Development: The GTP includes measures to enhance social welfare, improve access to
education and healthcare, and reduce poverty through targeted socioeconomic policies and
programs.

Comparison with Japan's Revitalization Strategy:

The Japan Revitalization Strategy sought to achieve three main goals by 2020:
 Realizing a strong economy,
 Reinforcing social security, and
 Reforming public structures.
 Both plans share some commonalities, such as prioritizing infrastructure development and
pursuing economic diversification.

2.2. What are the limitations of GTP?

The Growth and Transformation Plan (GTP) of Ethiopia, launched in 2010, has encountered several
limitations and challenges, reflecting the complex nature of implementing such ambitious economic
development programs.

Here are some of the limitations associated with the GTP:

 Implementation Capacity: The successful execution of a grand economic plan such as the GTP
demands robust implementation capacity, including governance, administrative capabilities, and
coordination across various government entities. Limited institutional capacity and bureaucratic
hurdles have been noted as hindrances to effective program implementation.
 Sustainability Concerns: The drive for rapid economic growth and industrial expansion has
raised concerns about the sustainability of the growth model, potential environmental impacts,
and the long-term resilience of economic advances achieved under the GTP.
 Fiscal Pressures: The plan's funding requirements and the ability of the government to
sustainably finance the proposed projects and initiatives have been subjects of concern. The need
for substantial financial resources to support infrastructure projects, industrialization efforts, and
social development programs poses significant financial challenges.
 Equitable Development: One of the crucial considerations for the GTP is ensuring that the
benefits of economic growth and development are equitably distributed across different segments
of the population, including rural and urban areas, various economic sectors, and different social
strata. The plan's impact on reducing regional disparities and ensuring equitable access to
opportunities has been questioned.

2.3. Compare ADLI with GTP

Comparing the Agricultural Development Led Industrialization (ADLI) with the Growth and
Transformation Plan (GTP) in Ethiopia provides a comprehensive view of the country's evolving
economic development strategies.

Here's a comparative overview between the two plans:

Objectives:
 ADLI: The ADLI plan, focused on leveraging agricultural development to propel
industrialization, prioritized the agricultural sector's advancement as a catalyst for broader
economic growth and transformation.
 GTP: The GTP, covering broader economic transformation and development goals, aimed at
achieving rapid and sustainable growth, industrial expansion, and critical infrastructure
development across various sectors.

Focus:
 ADLI: The primary focus of ADLI was agricultural-led industrialization, with a strong emphasis
on rural development, agricultural productivity enhancement, and agro-industrial activities.
 GTP: The GTP encompassed a more comprehensive set of objectives, including industrialization,
infrastructure development, human resource capacity building, and social welfare improvements,
extending beyond the agricultural sector to integrate multiple areas of economic growth and
transformation.

Implementation:
 ADLI: The program was developed as a sectoral strategy specifically targeting agriculture as a
key driver of industrialization and economic growth.
 GTP: The GTP, on the other hand, served as a broader national economic development plan
encompassing multiple sectors, reflecting a more comprehensive strategy for overall economic
transformation.

3. In order to achieve some development plan in developing countries we have two option:

a) Importing capital from developed countries (supported industrialization)

b) Encouraging domestic saving (Self-sufficient industrialization)
c) Which option is best for you?

When evaluating the options for achieving development plans in developing countries, the choice
between importing capital from developed countries (supported industrialization) and encouraging
domestic saving (self-sufficient industrialization) depends heavily on the specific context, constraints,
and long-term goals of the country in question.

Importing Capital from Developed Countries (Supported Industrialization):

Pros:
 Access to Technology and Expertise: Importing capital from developed economies can facilitate
the transfer of advanced technology, managerial expertise, and best practices, enabling faster
industrial development.
 Infusion of Financial Resources: Foreign capital inflows can provide much-needed financial
resources, thereby accelerating the pace of industrialization programs and infrastructure
development.
 Global Integration: Collaborating with developed nations through capital imports can boost global
economic ties, knowledge sharing, and market access, potentially enhancing the country's
economic competitiveness.

Cons:
 Dependency Risks: Heavy reliance on foreign capital can create dependencies, making domestic
industries vulnerable to external economic conditions and policies.
 Wealth Redistribution: The distribution of benefits from industrialization heavily influenced by
foreign capital can lead to unequal wealth distribution, potentially exacerbating social and
economic disparities.

Encouraging Domestic Saving (Self-sufficient Industrialization):

Pros:
 Enhanced Autonomy: Self-sufficient industrialization through domestic saving can foster greater
economic independence, reducing reliance on foreign influences.
 Sustainable Growth: Emphasizing domestic saving encourages the generation of internal
resources, promoting sustainable economic growth over the long term.
 Wealth Distribution Control: A focus on internal financing can potentially lead to more even
wealth distribution and the broader participation of the local population in industrialization
efforts.
Cons:
 Slower Pace of Development: Depending solely on domestic saving may lead to a slower pace of
industrial development, potentially lengthening the time needed to achieve broader economic
goals.
 Technical and Managerial Gaps: Limited access to external technology and expertise might pose
challenges in addressing technical and managerial gaps.

Conclusion: The choice between these options must be contextual and dynamic, shaped by a country's
specific economic conditions, institutional frameworks, and long-term development visions, among
other factors.

4. What are the experiences we share from the economic development planning of Asian
Tiger? (Taiwan, South Korea, Hong Kong, Singapore).

The economic development experiences of the "Asian Tigers" (Taiwan, South Korea, Hong Kong, and
Singapore) offer valuable insights for understanding successful development planning in the context of
rapid economic growth, industrialization, and export-oriented strategies.

Here are some common experiences shared by these economies:

 Export-Led Industrialization: The Asian Tigers pursued strategies focused on exporting
manufactured goods, leveraging competitive advantages in areas such as electronics, textiles, and
consumer goods to drive economic growth.

 Human Capital Development: Investment in education, vocational training, and skill

development played a crucial role in enhancing the quality of the labor force, supporting
technological advancement, and fostering innovation.

 Infrastructure Development: The creation and enhancement of robust infrastructure, including

transportation networks, ports, and energy systems, were critical for supporting industrialization
and economic expansion.

 Open Trade Policies: Embracing open trade policies and actively engaging in global markets via
trade agreements helped these economies to expand their export base and attract foreign
investment, facilitating economic growth.

 Institutional Reforms: Implementation of effective governance, transparent regulatory

frameworks, and supportive legal and financial systems contributed to an environment conducive
to business and industrial growth.

 Technological Innovation: Embracing technological innovation and investing in research and

development were key factors in the advancement of high-value industries and driving higher
productivity.

Reference

World Bank, IMF, and the United Nations, economic development, industrialization strategies in
developing economies.
Diao, X., 2010. Economic Importance of Agriculture for Sustainable Development and Poverty Reduction :
The Case Study of Ethiopia, IFPRI.
Economy of east Asia. Ethiopia Economic Reform And Development Agenda.
Gebre-selassie, A., Bekele, T., 1999. A Review of Ethiopian Agriculture : Roles , Policy and Small-scale
Farming Systems.
Development Forum (GDF) for the first round of policy dialogue between Ethiopia and Japan in June 2009.
Mellor, J., Dorosh, P., 2009. Agriculture and Exonomic Transformation of Ethiopia, ESSP-IIDiscussion
Paper 12, IFPRI, Addis Ababa.