Ethiopian Development Research Institute (EDRI) and International Food Policy Research Institute (IFPRI), Seventh International Conference on Ethiopian Economy, June 24, 2010
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Rural-Urban Transformation in Ethiopia - Implications for Development Strategies
1. ETHIOPIAN DEVELOPMENT RESEARCH INSTITUTE The Rural-Urban Transformation in Ethiopia: Implications for Development Strategy Paul Dorosh and Emily Schmidt IFPRI ESSP-II Ethiopian Economic Association Conference June 24, 2010 Addis Ababa 1
2. Ethiopia Strategy Support Program – II (2008-2012) Goal: Enhance national capacity for evidence-based policies for pro-poor growth Objectives Generate policy research results to fill key knowledge gaps Build a stronger and more integrated knowledge support system Strengthen the capacity of Ethiopian policy research institutions Contribute to the design and implementation of a national monitoring and evaluation system for the rural sector Main/Major Activities Joint evidence-based, policy-relevant research with EDRI and other institutions: (ex. determinants of agricultural productivity, implications of foreign exchange rationing, rural-urban transformation, watershed investments) Capacity building through institutional support to EDRI, CSA, MoARD, training courses. and funding of five PhD students at international universities Dissemination of research results through workshops, conferences, internet and publications Donors: USAID, DFID, CIDA, Irish Aid 2
3. Plan of Presentation Ethiopia’s changing economic landscape Structural shifts: sectoral and spatial A brand new world for economic development Research papers Rural-Urban Migration in Ethiopia (Valerie Mueller and Tassew Woldehanna) Trends in Household Expenditure and Welfare (Kibrom Tafere and Alemayehu Seyoum Taffesse) Rural and Urban Policies Affecting Spatial and Sectoral Linkages Getnet Alemu) CGE Analysis of the Rural-Urban Transformation (Paul Dorosh and James Thurlow) 3
4. Ethiopia’s Changing Economic Landscape Structural shift of the economy Sectoral (declining share of agriculture) Spatial (urbanization) A new era for economic development Infrastructure (expanding road networks) Electricity generation and use (even exports?!) Telecommunications (mobile phones and internet) Education and health 4
5. Structural Transformation Economic transformation (share of agriculture in total GDP) Comparisons with other East African countries Rapid agricultural growth Industrial growth Growth linkages and ADLI Agricultural growth and poverty reduction (CAADP Analysis) 5
6. Production and Real Prices of Major Cereals in Ethiopia, 2000/01 to 2008/09 Source: Dorosh and Ahmed (2009). 6
8. Economic Transformation in East Africa:Agricultural Share in GDP, 1980s-2000s Source: Calculated from World Bank, World Development Indicators. 8
9. Economic Transformation in East Africa:Agricultural Share in GDP, 1980-2008 Source: Calculated from World Bank, World Development Indicators data. 9
10. Ethiopia: Industrial Output and Growth1999/00 to 2008/09 Source: Calculated from Ministry of Finance national account statistics. 10
12. Annual rainfall varies across space Rainfall is highest and least variable in the western part of the country and the western slopes of mountains 12
14. Agricultural Value Added by Agro-Ecological Zone Zone 2: Rainfall sufficient highlands (cereal – based) Zone 3: Rainfall sufficient highlands (enset – based) – most of SNNPR Zone 4: Drought prone Source: 2005/06 EDRI Social Accounting Matrix. 14
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16. Land cultivated for each crop follows medium-term trends: total land cultivated increases 2.6% per year, 2009-2015
17. Land growth varies across region (1.2% per year in rainfall sufficient areas, 3.2% per year in drought-prone areas, 3.7% per year in pastoralist areas)
26. Agglomeration Index: measuring urban expansion In order to standardize urbanization measurements, we use methodology developed by Uchida and Nelson (2009): Urban areas are identified spatially using specific thresholds: A population density greater than 150 people per km2; Populations located within 1 hour travel time to a city of at least 50,000 people. City centers of at least 50,000 people 18
27. Travel Time and Agglomeration Index (Urbanization) Euclidean Distance (straight line distance) or distance in kilometers may not take into account specific localized biophysical factors In order to measure travel time to a major city: Estimation of Travel Times A series of GIS layers are merged into a ‘friction layer’ which represents the time required to cross each pixel Road type and class Paved – all weather Paved – dry weather Gravel – all weather Gravel – dry weather Earth Waterbodies Landcover Slope 19
30. Urbanization in East Africa2000 to 2005 Source: Calculated from World Bank, World Development Report data. 22
31. Ethiopia: Urban Population by City Size2007/08 Source: World Bank Development Report 2009, World Development Indicators. Note: Average agglomeration for 2000 is calculated using 2005 population weights.
32. Ethiopia: Population by City Size 24 Population (thousands) by City Size (Cities 20k and greater)
33. Ethiopia’s Changing Economic Landscape Structural shift of the economy Sectoral (declining share of agriculture) Spatial (urbanization) Infrastructure (expanding road networks) Electricity generation and use (even exports?!) Telecommunications (mobile phones and internet) Education and health 25
38. Urban Expansion: Greater Addis Ababa Agglomeration Index 1984 In 1984, Addis Ababa and other larger cities were primarily confined to its city administrative boundaries. There were only a few cities with greater than 50,000 people Limited road networks and more dispersed population characterized the demographic landscape. 30
39. Urban Expansion: Greater Addis Ababa Agglomeration Index 1994 By 1994, Ethiopia’s cities grew, and the country’s transportation network expanded Urban corridors formed between Addis Ababa and Nazaret Shashamene and Awasa also formed an urban network between Oromia and SNNP regions. Jimma urbanization is also expanding along key road networks 31
40. Urban Expansion: Greater Addis Ababa Agglomeration Index 2007 By 2007, urban linkages were clearly visible throughout Oromia, SNNP, and Amhara regions. Addis Ababa expanded to connect Sebeta and Bishoftu, and Asela in the South. Addis Ababa also connected to Ambo in the west, and DebreBerhan in the east Jimma had grown into a southwestern hub with opportunities to link with Nekemte to the north. 32
43. Ethiopia’s Changing Economic Landscape Structural shift of the economy Sectoral (declining share of agriculture) Spatial (urbanization) Infrastructure (expanding road networks) Electricity generation and use (even exports?!) Telecommunications (mobile phones and internet) Education and health 35
44. Ethiopia: Electricity Generation Capacity1958 to 2011* 36 Source: Calculated using CSA Survey of Manufacturing (various years) and Ethiopian Electric Power Corporation data. Notes: Figures for 2008-10 based on additional capacity from Tekeze I (300 Mw) in 2009; and TanaBeles (460 Mw) in 2010. 2011 figures is 2010 figure plus Gile Gibe II (420 Mw) for which the tunnel collapsed in December, 2009.
45. Ethiopia: Electricity Generation Capacity1958 to 2011* 37 Source: Calculated using CSA Survey of Manufacturing (various years) and Ethiopian Electric Power Corporation data. Notes: Figures for 2008-10 based on additional capacity from Tekeze I (300 Mw) in 2009; and TanaBeles (460 Mw) in 2010. 2011 figures is 2010 figure plus Gile Gibe II (420 Mw) for which the tunnel collapsed in December, 2009.
46. Ethiopia: Electricity Generation Capacity1958 to 2011* 38 Source: Calculated using CSA Survey of Manufacturing (various years) and Ethiopian Electric Power Corporation data. Notes: Figures for 2008-10 based on additional capacity from Tekeze I (300 Mw) in 2009; and TanaBeles (460 Mw) in 2010. 2011 figures is 2010 figure plus Gile Gibe II (420 Mw) for which the tunnel collapsed in December, 2009.
47. Ethiopia’s Changing Economic Landscape Structural shift of the economy Sectoral (declining share of agriculture) Spatial (urbanization) Infrastructure (expanding road networks) Electricity generation and use (even exports?!) Telecommunications (mobile phones and internet) Education and health 39
48. Ethiopia: Fixed Line and Cellular Telephones2003 to 2010 40 Sources: ITU (2009). Information Society Statistical Profiles 2009 - Africa, International Telecommunication Union (ITU). Ethiopian Telecommunications Corporation (ETC). ETC Strategic Plan. http://www.ethionet.et/aboutus/visionmission.html
49. Ethiopia: Fixed Line and Cellular Telephones2003 to 2010 41 Sources: ITU (2009). Information Society Statistical Profiles 2009 - Africa, International Telecommunication Union (ITU). Ethiopian Telecommunications Corporation (ETC). ETC Strategic Plan. http://www.ethionet.et/aboutus/visionmission.html
50. Ethiopia’s Changing Economic Landscape Structural shift of the economy Sectoral (declining share of agriculture) Spatial (urbanization) Infrastructure (expanding road networks) Electricity generation and use (even exports?!) Telecommunications (mobile phones and internet) Education and health 42
51. Net Primary School Enrollment 43 Source: World Bank World Development Indicators.
52. Ethiopia Food Security Index 44 Source: Household Income Consumption Expenditure Survey, and the Demographic and Health Survey from 1999/2000 and 2004/05 *The calculated calorie-based undernutrition for Ethiopia is based on the undernourishment cutoff of 1,990 kilocalories per day **Proportion of underweight children less than five years of age is calculated as a weight-for-age was less than two standard deviations
53. Plan of Presentation Ethiopia’s changing economic landscape Structural shifts: sectoral and spatial A brand new world for economic development Research papers Rural-Urban Migration in Ethiopia (Valerie Mueller and Tassew Woldehanna) Trends in Household Expenditure and Welfare (Kibrom Tafere and Alemayehu Seyoum Taffesse) Rural and Urban Policies Affecting Spatial and Sectoral Linkages Getnet Alemu) CGE Analysis of the Rural-Urban Transformation (Paul Dorosh and James Thurlow) 45
54. Rural – Urban Migration 46 Source: de Brauw et al., (2010).
55. Rural – Urban Expenditure and WelfarePoverty Incidence 47
57. Land Policies and Migration Regional governments' proclamations restrict access to rural land by prescribing the need to be a rural resident in that particular region as a condition for acquiring rural land free of charge. No right to transfer land right on sale or in exchange with another property No easy transferability of land rights: transfer of use right in the form of inheritance and donation is allowed only to the right holder's family members who are residing in the rural kebele and are engaged or wish to engage in agriculture. These policies inhibit migration from rural areas. 49
58. Implications for Development StrategyCGE Analysis Implications on accelerated rural-urban migration Analysis of alternative investments Large urban centers Small urban centers Rural 50
59. Conclusions: Development Strategy Sectoral allocation of public investments Agriculture Development Led Industrialization (ADLI) or greater emphasis on urban investment? Land and Migration Regulations: Easing of regulations? Prohibition of sale of land, loss of land rights for those who leave rural areas Registration requirements for new migrants Reliable empirical economic analysis can shed light on these issues Hopefully, these papers will spur this research. 51