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This is good, but there are some potential problems. 1. Ethiopia's GDP per capita is ~$700 USD, so this growth is from a very low base. 2. Total fertility rat

This is good, but there are some potential problems. 1. Ethiopia's GDP per capita is ~$700 USD, so this growth is from a very low base. 2. Total fertility rate is 4.28. Compare this to China at 1.57 and USA at 1.84. This means that some of the growth just goes to supporting a larger population. 3. I have read elsewhere that you need government connections and a lot of money to do business in Ethiopia. So the benefits of this growth might not be as broad as they otherwise could be.

joelhaasnoot 8y ago
Land ownership is also an issue - I believe (no expert, don't quite me) you can get a 99 year lease.
AlanSE 8y ago
Interesting points you raise, I thought about calculating this by-hand, but then I realized that actual numbers are published by actual economists. Here are some old figures: https://tradingeconomics.com/ethiopia/gdp-per-capita-growth-annual-percent-wb-data.html https://tradingeconomics.com/ethiopia/gdp-per-capita-growth-... In that year, GDP growth was 7.5%, but per-capita GDP growth was 4.9%. I could have some gaps in my knowledge of the meanings in these figures, but I think the difference roughly equates to what you speculate - that population growth eats some of the economic growth when viewed from the perspective of the individual. Also important to note, I think that these are nominal, not real figures. So right now, I think we would reasonably expect sub-5% real per-capita growth. Even correcting for that I'm sure it's an astounding pace of improvement. It's hard to wrap your head around multi-year improvements in quality of life of that scale. But there's a depressing side, that maybe some nations are actually contracting in per-capita real GDP.
- rgbrenner 8y ago
  That's a real growth rate (not nominal). They have 15% annual inflation.
- ido 8y ago
  But there's a depressing side, that maybe some nations are actually contracting in per-capita real GDP. I'm sure some countries are contracting, but not due to Ethiopia growing - the world economy is not zero-sum.
oldcynic 8y ago
Fertility rate will come down as incomes rise and child mortality falls. Until recently Ethiopia had one of the world's highest child mortality rates so I would expect some significant lag.
hyperpape 8y ago
The $700 figure looks to be 3 years and about 30% out of date. It all depends on whether you have sustained growth, but that's where China started roughly 3 decades ago: https://tradingeconomics.com/china/gdp-per-capita https://tradingeconomics.com/china/gdp-per-capita.
- jeffreyrogers 8y ago
  That's true. China had some advantages at the local level though, in that many of the reforms were actually first done by the peasants and tacitly allowed by the government until Deng Xiaoping allowed economic reform to happen. I think Ethiopia has some really tough challenges ahead of it, but it will obviously be good for them and good for Africa if they can make it work.
mrec 8y ago
There's also potential trouble brewing wih Egypt over Ethiopia damming the Nile, on which Egypt is completely dependent. https://en.wikipedia.org/wiki/Grand_Ethiopian_Renaissance_Dam#Impact_on_Sudan_and_Egypt https://en.wikipedia.org/wiki/Grand_Ethiopian_Renaissance_Da...
- majos 8y ago
  It's interesting to me how the problem of "who owns what parts of this river?" is playing out in so many parts of the world. Off the top of my head we have the Nile with Egypt and Ethiopia, the Yangtze (edit: this should be Mekong) with China and much of southeast Asia, the Murray river in southwest Australia (bickering states rather than countries, but still) . . . and this is just what I've read in the Economist this year. Is this really that new? Has damming technology only recently made these issues relevant?
  - houshuang 8y ago
    What's the issue with the Yangtze? It only flows within China?
    - notahacker 8y ago
      I imagine the OP means the Mekong
    - mrec 8y ago
      Depends what you count as China; the Yangtze, Yellow River and Mekong all originate in Tibet. They're probably the primary reason why China is so absolutely adamant that Tibet is and has always been part of China; losing that water would represent an existential threat.
      - seanmcdirmid 8y ago
        And why China sees global warming as such a huge problem.
  - 8y ago
IkmoIkmo 8y ago
Some thoughts on your points: 1. True, but not radically different from the rest of Africa. Further the PPP figure is about $1700, which is a bit more indicative of purchasing power / standard of wealth. 10% growth in Ethiopia may not be as impressive as say China growing 10%, but it's still 10% growth that few African countries can match consistently. Having $170 extra can mean better nutrition, a cellphone, a bicycle, communal investments etc. Moreover, it shows good prospects and stability, the type of conditions necessary to attract FDI and cheap borrowing rates going into the future. 2. Not really. Fertility rates tend to have a strong negative relationship with wealth. The best thing you can do to reduce fertility rates is improve economic prospects in a country. Populations aren't growing because fertility rates, they're going down. Populations are growing because general healthcare and life expectancy has improved radically in the past 50 years or so. 3. That's the case all over Africa, but rising tides lift all boats at least to some extent. I mean, take a look at South Korea. It had a dictatorship until the 80s and was extremely corrupt, we still see high-profile cases of corruption (right to the 43rd prime minister resigning on corruption charges in 2016). Corruption is obviously not desirable and indeed distributions benefits unevenly, but there are many countries (like Korea) which have a history of high-corruption and rapidly growing socioeconomic conditions of ordinary citizens.
- jeffreyrogers 8y ago
  1. I agree. I was pointing that out more to show that even with impressive growth rates they still have a long way to go. 2. I agree that TFR declines with wealth, but it is still true that if your population is growing your economy has to grow faster to compensate for it. I am not sure how quickly TFR falls as the economy grows. If it lags significantly this will still have an effect. 3. This one is trickier. There are large differences between the poor African countries and the previously poor Asian countries. The authoritarian governments in South Korea, Taiwan, and China actually helped these countries get out of poverty because they could enforce policies that otherwise would not be popular, like redistribution of land to peasants and protecting infant industries from foreign competition while they developed. Japan was a little different (actually so was China) but had similar policies. These policies are not being implemented in Africa. The corruption in Asia and the corruption in Africa are also of a different kind. South Korea allowed some corruption as long as the managers of the companies involved where able to produce globally competitive products. In Africa the corruption has largely enriched a small number of well connected people while doing nothing to help the local population. I am not sure how corrupt Ethiopia is. Either way, I wasn't talking about corruption as much as the difficulty of doing business in Ethiopia, which seems to be difficult if you do not already have money and connections, which suggests that the benefits of economic growth will be more concentrated than they otherwise could be and they have in the Asian countries that successfully emerged from poverty. Africa has had 50 years to adopt better policies, but instead we see frequent civil wars, endemic corruption, and poor governance. These problems aren't insurmountable, but they are large.

joelhaasnoot 8y ago

Land ownership is also an issue - I believe (no expert, don't quite me) you can get a 99 year lease.

AlanSE 8y ago

Interesting points you raise, I thought about calculating this by-hand, but then I realized that actual numbers are published by actual economists. Here are some old figures: https://tradingeconomics.com/ethiopia/gdp-per-capita-growth-annual-percent-wb-data.html https://tradingeconomics.com/ethiopia/gdp-per-capita-growth-... In that year, GDP growth was 7.5%, but per-capita GDP growth was 4.9%. I could have some gaps in my knowledge of the meanings in these figures, but I think the difference roughly equates to what you speculate - that population growth eats some of the economic growth when viewed from the perspective of the individual. Also important to note, I think that these are nominal, not real figures. So right now, I think we would reasonably expect sub-5% real per-capita growth. Even correcting for that I'm sure it's an astounding pace of improvement. It's hard to wrap your head around multi-year improvements in quality of life of that scale. But there's a depressing side, that maybe some nations are actually contracting in per-capita real GDP.

rgbrenner 8y ago
That's a real growth rate (not nominal). They have 15% annual inflation.
ido 8y ago
But there's a depressing side, that maybe some nations are actually contracting in per-capita real GDP. I'm sure some countries are contracting, but not due to Ethiopia growing - the world economy is not zero-sum.

oldcynic 8y ago

Fertility rate will come down as incomes rise and child mortality falls. Until recently Ethiopia had one of the world's highest child mortality rates so I would expect some significant lag.

hyperpape 8y ago

The $700 figure looks to be 3 years and about 30% out of date. It all depends on whether you have sustained growth, but that's where China started roughly 3 decades ago: https://tradingeconomics.com/china/gdp-per-capita https://tradingeconomics.com/china/gdp-per-capita.

jeffreyrogers 8y ago
That's true. China had some advantages at the local level though, in that many of the reforms were actually first done by the peasants and tacitly allowed by the government until Deng Xiaoping allowed economic reform to happen. I think Ethiopia has some really tough challenges ahead of it, but it will obviously be good for them and good for Africa if they can make it work.

mrec 8y ago

There's also potential trouble brewing wih Egypt over Ethiopia damming the Nile, on which Egypt is completely dependent. https://en.wikipedia.org/wiki/Grand_Ethiopian_Renaissance_Dam#Impact_on_Sudan_and_Egypt https://en.wikipedia.org/wiki/Grand_Ethiopian_Renaissance_Da...

majos 8y ago
It's interesting to me how the problem of "who owns what parts of this river?" is playing out in so many parts of the world. Off the top of my head we have the Nile with Egypt and Ethiopia, the Yangtze (edit: this should be Mekong) with China and much of southeast Asia, the Murray river in southwest Australia (bickering states rather than countries, but still) . . . and this is just what I've read in the Economist this year. Is this really that new? Has damming technology only recently made these issues relevant?
- houshuang 8y ago
  What's the issue with the Yangtze? It only flows within China?
  - notahacker 8y ago
    I imagine the OP means the Mekong
  - mrec 8y ago
    Depends what you count as China; the Yangtze, Yellow River and Mekong all originate in Tibet. They're probably the primary reason why China is so absolutely adamant that Tibet is and has always been part of China; losing that water would represent an existential threat.
    - seanmcdirmid 8y ago
      And why China sees global warming as such a huge problem.
- 8y ago

IkmoIkmo 8y ago

Some thoughts on your points: 1. True, but not radically different from the rest of Africa. Further the PPP figure is about $1700, which is a bit more indicative of purchasing power / standard of wealth. 10% growth in Ethiopia may not be as impressive as say China growing 10%, but it's still 10% growth that few African countries can match consistently. Having $170 extra can mean better nutrition, a cellphone, a bicycle, communal investments etc. Moreover, it shows good prospects and stability, the type of conditions necessary to attract FDI and cheap borrowing rates going into the future. 2. Not really. Fertility rates tend to have a strong negative relationship with wealth. The best thing you can do to reduce fertility rates is improve economic prospects in a country. Populations aren't growing because fertility rates, they're going down. Populations are growing because general healthcare and life expectancy has improved radically in the past 50 years or so. 3. That's the case all over Africa, but rising tides lift all boats at least to some extent. I mean, take a look at South Korea. It had a dictatorship until the 80s and was extremely corrupt, we still see high-profile cases of corruption (right to the 43rd prime minister resigning on corruption charges in 2016). Corruption is obviously not desirable and indeed distributions benefits unevenly, but there are many countries (like Korea) which have a history of high-corruption and rapidly growing socioeconomic conditions of ordinary citizens.

jeffreyrogers 8y ago
1. I agree. I was pointing that out more to show that even with impressive growth rates they still have a long way to go. 2. I agree that TFR declines with wealth, but it is still true that if your population is growing your economy has to grow faster to compensate for it. I am not sure how quickly TFR falls as the economy grows. If it lags significantly this will still have an effect. 3. This one is trickier. There are large differences between the poor African countries and the previously poor Asian countries. The authoritarian governments in South Korea, Taiwan, and China actually helped these countries get out of poverty because they could enforce policies that otherwise would not be popular, like redistribution of land to peasants and protecting infant industries from foreign competition while they developed. Japan was a little different (actually so was China) but had similar policies. These policies are not being implemented in Africa. The corruption in Asia and the corruption in Africa are also of a different kind. South Korea allowed some corruption as long as the managers of the companies involved where able to produce globally competitive products. In Africa the corruption has largely enriched a small number of well connected people while doing nothing to help the local population. I am not sure how corrupt Ethiopia is. Either way, I wasn't talking about corruption as much as the difficulty of doing business in Ethiopia, which seems to be difficult if you do not already have money and connections, which suggests that the benefits of economic growth will be more concentrated than they otherwise could be and they have in the Asian countries that successfully emerged from poverty. Africa has had 50 years to adopt better policies, but instead we see frequent civil wars, endemic corruption, and poor governance. These problems aren't insurmountable, but they are large.