A Tale of Two Countries: A Comparative Study on the Development State Models of Ethiopia

and Brazil

Studying the developmental state can alter its definitions in theory and policy. In theory,
comparing developmental states could give birth to a new line of studies focusing on the successes and
flaws of characterizing developmental state models and even developing countries. In policy,
comparing developmental states can provide insights into how governments can employ strategies to
sustain economic growth, examine industrial policies, foster social development, and improve
institutions to promote overall development. In this paper, I will compare the experiences of two
developing countries, Ethiopia and Brazil, as development states. I acknowledge that these countries
have distinct historical contexts that may contribute to economic growth and development and these
will be discussed in this paper. I will be focusing on their characteristics as development state models
and I will be revealing their implications for inclusive development. Moreover, gaining an
understanding of how these development states in developing countries can provide insights for other
developing countries like the Philippines to adopt similar strategies for development.

The Developmental State and Its Definitions

This section of the paper will define the developmental state and contextualize it in the
globalized world we live in. Chalmers Johnson first used the term “developmental state” to describe the
phenomenon occurring in the East Asian region, specifically in Japan (Bresser [2018:36]; Caldentey
[2009:27]). Johnson enumerated many elements of Japan’s developmental state experience but
Bresser-Pereira [2018:38] summarized them into four:
“(i) [the state] views economic growth as its primary objective;
(ii) [the state] intervenes moderately in the market by planning the economy’s non-competitive sector
and by adopting strategic industrial policies;
(iii) [the state] operates an active macroeconomic policy by limiting budget and current account deficits
and by getting “right” the five macroeconomic prices, particularly the exchange rate; and

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 (iv) [the state] is politically supported by a developmental class coalition formed of entrepreneurs,

workers, public bureaucrats, and sectors…”.

Woldegiyorgis [2014:6-11] outlined six features of the developmental state, namely interventionist,
vision-oriented, effective planning and coordination, committed to building human capital, efficient
and autonomous bureaucracy, and strong executive-weak legislative. To synthesize these, the
developmental state is a state that: (a) is guided by a leader who sets goals, plans, policies, and programs
to achieve development, (b) directs the economy with the private sector responding and cooperating
with the government, (c) commits to building human capital and pushing for social development, and
(d) possesses a technocratic bureaucracy that can assess and decide on policies for development.
Nevertheless, I agree with Woldegiyorgis [2014] that the features outlined are not necessarily the only
means for comparison. I also want to point out that the features of developmental states vary because
of the differences in history and context.
Moving on, Woo-Cummings [1999:2] argued that the developmental state is sometimes called
a plan-rational capitalist system wherein the private sector is guided by the state's "visible hand". In
addition, Chang [1999:183] maintained that the developmental state can achieve economic
development as it regulates both economic and political relations and sustains industrialization. These
definitions imply that the developmental state advocates strong state intervention, especially in
addressing market inefficiencies and industrialization. The implication is significant against globalized
neoliberal principles. As observed from Western democracies, democratic countries in the developing
world favor and apply free market mechanisms to their policies. There may be success stories but
failures are pronounced in Latin America and Africa (Harrison [2019]; Rodriguez [2019]; Steger and
Roy [2010]) when these countries lose all hope for development.
Neoliberalism emerged when the “interventionist” approach from the Great Depression to the
mid-1970s lost its effectiveness to stabilize the economies of countries [Kotz 2002:64]. The nature of
neoliberal policies revives the free market principles that dominated much of the theoretical and
empirical world. During the neoliberal ‘wave’, the US and UK strongly advocated neoliberalism.
Neoliberal principles were also injected into developing countries through international institutions
like the World Bank and the International Monetary Fund (IMF) [Kotz 2002:64]. Needless to say, the

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developmental state is a deviation from the neoliberal world we live in. Despite this, the state is still
capitalist. One of the main features of the developmental state is state guidance on the private sector.
The other objective is profit maximization as well as supporting and sustaining industrial development.
Another controversy that could emerge from defining the developmental state is whether state-led
development inhibits liberal principles of freedom, participation, and rights. It is easy to raise this
argument since developing states heavily intervene in the economies, which also goes against a typical
neoliberal perspective. The counterargument is that developmental states do not impede social
development.

The Ethiopian Developmental State: From War and Revolutions to Development

Ethiopia’s journey toward a developmental state can be likened to Charles Dickens’
characterization of Paris, which is chaotic, turbulent, and violent. Ethiopia is located in the
northeastern part of Africa, often called the Horn of Africa. It shares borders with six countries:
Eritrea to the north, Djibouti and Somalia to the east, Kenya to the south, and South Sudan and Sudan
to the west. Similar to other African countries, this region is notorious for its civil wars, conflicts, and
interstate tensions. Despite this backdrop of violence, Ethiopia became one of the first African
countries to adopt a state-led approach to development.
From the imperial era onwards, Ethiopia relied heavily on state-led development initiatives.
Hence, the developmental state can be seen as a continuation of Ethiopia's traditional development
strategies. Historical evidence can be found during the Tewodros empire (1885-68), the Haile-Selassie
empire (1941-74), and the Derg military dictatorship (1974-91). These historical examples provide
insights into how the country intended to develop [Clapham 2017:1152-1153]. The imperative to
develop can also be considered the reason Ethiopia adopted a state-led approach to development.
Woldegiyorgis [2014] suggests that there was a need to shift to an appropriate developmental approach
because of the realization of the country’s underdevelopment and slow progress toward achieving the
Millennium Development Goals (MDGs). For instance, Ethiopia's government adopted the Growth
and Transformation Plan (GTP) in 2010, intended to facilitate faster economic growth and reduce

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poverty. This plan focused on creating an environment for sound governance. It also increased
productivity in the agricultural and manufacturing sectors and improved the quality of education and
health services. The GTP was designed to achieve the MDGs by 2015, and the Ethiopian government
has made considerable progress in achieving many of those goals.
The vision and leadership of the Ethiopian People’s Revolutionary Democratic Front
(EPRDF) heralded the radical shift from neoliberalism to developmentalism. Former Prime Minister
Meles Zenawi, the most influential political figure in Ethiopia and leader of the EPRDF, stressed the
importance of shifting to a developmental state to achieve economic growth and ensure the country's
survival (Woldegiyorgis [2014:12]; Wayessa [2018:90]). His ideology comes from his master’s thesis,
African Development: Dead Ends and New Beginnings, where he argued that developmentalism was
the most appropriate alternative to neoliberal development policies [Woldegiyorgis 2014:13]. In his
discussions with Zenawi, de Waal [2018] reported that the Washington Consensus failed to account
for the inherent problems present in African countries including Ethiopia. Zenawi maintained that
economic liberalization was not effective in Ethiopia since the government manages the economy more
effectively than the private sector [de Waal 2018:2]. As production factors are limited, the government
must intervene with investment and resource allocation to promote economic growth [de Waal
2018:2]. In other words, adhering to the Washington Consensus only subjects developing countries
like Ethiopia to reliance on capitalist states [Clapham 2017:1154]. To avoid such a dependency, the
state must promote development in accordance with its self-determination.
Clapham [2017] provided a comprehensive discussion of how the developmental state
promoted development. In an attempt to emulate the East Asian region, the EPRDF government
implemented agricultural development-led industrialization (ADLI). Besides the emulation, the policy
was formulated in response to the famine-stricken and poor regions of the country and in commitment
to self-reliance [Clapham 2017:1154]. Despite the efforts, strengthening the political hold was clearly
manifested in the EPRDF agenda. A decentralization policy was implemented in the guise of
integrating the major ethnic groups into mainstream politics [Clapham 2017:1154]. This can be
viewed as a strategic move to gain political support and prolong the EPRDF's hegemony. This can also

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be perceived as counter-intuitive to the development enterprise because decentralization hampers the
central government's ability to dictate development policies [Clapham 2017:1154].
After the 2005 election controversy, the EPRDF was compelled to show developmental
paradigm results (Woldegiyorgis [2014:13]; Wayessa [2018:89]; Clapham [2017:1154]). As ADLI
continued to thrive, improving infrastructure conditions became the government's priority. The
government invested in (a) road construction to improve communication and distribution in
Ethiopia’s mountainous regions; (b) human capital formation, specifically in expanding higher
education and enhancing health services; and (c) hydroelectric dams to meet domestic needs and export
electricity to neighboring countries [Clapham 2017:1155-56].
Because the country had no comparative advantage in the export industry, the government
draw funds from three sources of capital to fund the infrastructure projects. First, the government
engages in rent-seeking to support its projects. Specifically, the government receives large profits from
its monopoly on the telecommunications sector. This is actually more expensive and less efficient than
neighboring countries [Clapham 2017:1156]. The government also receives bank deposits and
converts them into government bonds [Clapham 2017:1156]. Second, the government requests
external development aid and concessional loans. Despite the denial of neoliberalism and lack of sound
governance, the government manages to gain aid and assistance from other countries because of clever
pitches through its ‘peacekeeping’ reputation in the region and effective budget exhaustion [Clapham
2017: 1156-57]. Third, foreign direct investments (FDI) fund infrastructure projects whether by
investing labor or capital in certain sectors of the economy such as floriculture, cement, leather, and
textiles [Clapham 2017:1157-58].
Ethiopia’s journey to development is one of the most inspiring experiences that developing
countries could emulate. The wars and revolutions are the efforts to make the country and the region
unites to some national identity. But, without state initiative and intervention, the road to
development will stagnate, if not cease. Nevertheless, the successes of the developmental state in
Ethiopia could not overshadow the existing flaws and shortcomings of such an approach.

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The Brazilian Developmental State: Taking the ‘Left’ Turn to Development
If Ethiopia is like Paris, France, Brazil can be likened to London, England. Sticking to Charles
Dickens' story, Brazil is as bustling as London. This is because it is home to over 211 million people,
making it the most populous country in South America. It is also the sixth most populous country in
the world. Brazil is also characterized by stark inequalities in society. To illustrate this, the richest 5% of
the population constitutes 95% of the population’s wealth [Oxfam, n.d.]. Thus, I proceed to discuss
how Brazil has managed its social and economic conditions by taking advantage of its developmental
state.
Brazil's state was already recognized as managing and directing the economy as early as the
1930s. Under Getulio Vargas' presidency (1930-1945 and 1951-1954), necessary institutions and
policies were crafted to manage the adverse effects of the Great Depression [Schenider 2015:116] and
to make the country self-sufficient and independent [Martinez-Diaz and Brainard 2009:5]. These
institutions and policies included the formation of state-owned oil and steel firms such as Petrobras, the
imposition of protectionist policies in trade, the reformation of sectors of the economy, and the
creation of a technocratic bureaucracy called the Departamento Administrativo do Servico Publico
[Schneider 2015:116]. In other words, Brazil had already adopted a developmental state. The
government had enacted import substitution industrialization, similar to East Asian countries, and
imposed strong state intervention in the economy to protect the country’s industries [Garcia
2013:2-3].
Brazil was not exempted from the neoliberal Washington Consensus framework that appeared
in Ethiopia as well. From the 1980s to the late 1990s, Brazil was ‘neoliberalized’. This meant that the
period marked the diminished role of the state in economic affairs, the release of tariff and non-tariff
barriers, and the privatization of state-owned firms [Martinez-Diaz and Brainard 2009:6]. Nevertheless,
the consensus failed to produce positive results, especially when Brazil experienced an economic decline
from 1990 to 2001 [Garcia 2013:6]. During 1998-2015, Latin America saw the election of left-wing
presidents including former Brazilian President Luis Inacio Lula de Silva. This observation marked the

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departure from free market principles and the introduction of redistributive social policies [Ricz
2017:86].
Former President Lula (2003-2008) pushed for developmentalism as the most viable
development strategy that could produce better results than neoliberalist policies [Garcia 2013:3]. To
clarify, he did not entirely abandon neoliberal policies but rather incorporated them into his
macroeconomic policies, like open trade. Besides these policies, controlling inflation, maintaining
monetary stability, and paying public debt were Lula’s top priorities (Garcia [2013:6-7]; Ricz
[2017:94-95]). Industrial policies were also initiated that allowed the state to guide private firms. In
2004, the Technological and Foreign Trade policy targeted industries of semiconductors, software, and
medicines to promote innovation and expansion [Garcia 2013:7]. In 2008, the Program for Productive
Development replaced the earlier industrial policy and aimed to improve the sectors of aviation, mining,
steel, oil, and gas [Garcia 2013:7].
Under the supervision of the IMF, Lula expanded the state's goal from just growing
economically to improving social conditions through “Zero Hunger” [Garcia 2013: 6-7]. As
mentioned, the government added social reforms to its agenda. From 2003, the government crafted
and implemented programs that reduce poverty and inequalities and integrate the marginalized into
mainstream society [Garcia 2013:8]. The Bolsa Familia program is an example of these programs. It
involves a conditional cash transfer for the poorest of the population. The program was designed to aid
in families' financial spending as long as families reach a monthly income per capita of 41$ and meet
health and education requirements for children and/or mothers [Garcia 2013:8].
As observed, the history of developmentalism in Brazil took a left turn when most of the
neoliberalist policies were not making things better. Literally, the leadership and vision of former
President Lula were one of the turning points of state involvement in the economy. In addition, the
developmental state in Brazil extended its function beyond just intervening and regulating the market
inefficiencies; it introduced and sustained the efforts to address social inequalities. By doing so, the
economic growth in Brazil does not solely base on numbers but also on the quality of life. It is no

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wonder that Brazil is considered an economic superpower alongside countries like Russia, India,
China, and South Africa.

The Tale of the Two Countries: Insights for Development and Developing Countries
The previous discussions focused on providing justifications for Ethiopia and Brazil to adopt a
state-led development strategy and on illustrating the policies and programs implemented. I will now
distinguish the characteristics of these two countries – both the similarities and differences – and how
these translate to the need for inclusive development, especially in developing countries. The Venn
diagram below summarizes the key points to be explained. First, I will point out the similarities, then
the differences between these developmental states. I will also include their implications for
development.

Figure 1. The Key Similarities and Differences in the Developmental States between Ethiopia
and Brazil

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Tradition of state-led development. During the imperial period, Ethiopia implemented
‘modernization’ projects to improve the country's economic conditions. Similarly, Gutelio Vargas'
presidency marked the implementation of state-directed policies and projects to achieve self-sufficiency.
Both these countries had a history of state-led development before and after the implementation of
neoliberal policies instituted by the World Bank and IMF. Besides the emulation of East Asia, this
implies that countries that have a tradition of letting the state take the reins of the economy are more
likely to rapidly develop - a word of caution! This assumes the state considers country contexts. It is
worth noting that such a history of state-led development projects provides insight into how both
liberal and developmental policies can direct the economy at their weakest and strongest points.
Recognition of social ills. States must recognize and address their countries' challenges proactively.
On the one hand, Ethiopia realized the poor conditions and fragmented society that affected the
country's peace, security, and economy. On the other hand, Brazil acknowledged income disparities
and economic decline affected its citizens' quality of life. Both experiences highlighted the need for the
state to take the reins of the economy to address these social issues. By acknowledging the challenges,
engaging with its citizens, and implementing effective policies, the state can work towards sustainable
and inclusive solutions.
Flexibility to the changing landscape. These two countries are notable for their flexibility to
navigate the changing political and global economic landscape. The EPRDF did not delve into
industrialization immediately but considered the need to integrate ethnic nationalities into the
country. In addition, the EPRDF recognized and seized the opportunity of foreign investments
coming from countries like India and China. These investments were needed for state infrastructure
expenditures. Brazil also exemplified such flexibility when Lula built upon the Washington Consensus'
liberal policies. State-led development does not and must not follow a linear path toward development.
It must consider the resources available and the landscape to create appropriate and effective policies.
Priorities. As mentioned, these two countries experienced a diversion to neoliberal policies for a
period in their history. But Brazil has a bigger headstart than Ethiopia because of its economic
development and sophistication. As of 2021, Ethiopia's GDP growth rate is 5.6% while Brazil's is 4.6%

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[The World Bank, n.d.]. Despite this, Brazil is classified as an upper-middle-income country while
Ethiopia is a lower-middle-income country. This can be attributed to the varying responses to
neoliberal policies and priorities in state agendas. Ethiopia focused on building political stability and
ADLI, while Brazil focused on innovating its many sectors. I acknowledge that these actions were
heavily influenced by the environment, but this implies the state should have a clear vision of what they
want to achieve.
Integrating democracy. In this era, democracy is essential for inclusivity, participation, and
accountability, whether a state is liberal or developmental. Adopting democracy will promote the
well-being of its population and ultimately, its development. However, this is absent in Ethiopia
because political decisions come from one party, making the regime seem autocratic. In addition, the
EPRDF abuses its citizens' civil and political rights [Berhe 2021:125]. Brazil's social programs
integrated with the state agenda seem more promising than Ethiopia's. This is illustrated in the
inclusion of other social groups in political processes through programs like Zero Hunger or Bolsa
Familia. But, even democracy in Brazil is questioned because of clientelism and patronage [Prado et al.
2016:403], contradicting the principles of transparency and good governance.

Among the lessons from Charles Dickens’ A Tale of Two Cities, I emphasize resilience and
transformation. I relate this to Ethiopia and Brazil. Despite harsh conflict and inequality conditions,
these countries have made considerable development progress. Despite the dynamic global
environment, these states adapted and transformed the available resources to their advantage. The
determination of the countries’ leaders to achieve economic and social development was evident in the
state-led strategies and the public-private sector coordination to achieve industrialization and
innovation in the economy. In addition, the gradual expansion of social services and existing
bureaucratic structures also aided development progress. Nevertheless, there is more room for
improvement in the policy framework and conceptualization of developmental states. The democratic
status of both countries requires rethinking and clever maneuvering, so participation, transparency,
and inclusivity would improve development.

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