Author: Jostein Hauge

Dr. Jostein Hauge is an economist and a Research Associate at the Centre for Science, Technology and Innovation Policy (Institute for Manufacturing) at the University of Cambridge. His research focuses on economic development, industrialisation, technological change, international trade, globalisation, and the role of the state in economic change.

Should the African lion learn from the Asian tigers? A comparison of FDI-oriented industrial policy in Ethiopia, South Korea and Taiwan

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The Huajian shoe factory in the Eastern Industrial Zone in Ethiopia. Photo: .

Ethiopia is being hailed as one of the most successful growth stories in Africa. Because of the country鈥檚 rapid economic growth, the high degree of state intervention in the economy, and the state鈥檚 focus on industrialization, people have started to compare Ethiopia to the Asian 鈥榯igers鈥� (; ; , ; ) 鈥� four countries in East Asia (Hong Kong, Singapore, South Korea and Taiwan) that underwent rapid industrialization and maintained exceptionally high growth rates in the post-WWII era.

However, this emerging literature on Ethiopia-Asia comparisons has not yet sufficiently addressed one of the most important aspects of Ethiopia鈥檚 industrialization strategy 鈥� the attraction of foreign direct investments (FDI) into the manufacturing sector.

The rationale of my was this gap in the literature. In it, I ask the question: Should the African lion learn from the Asian tigers with respect to FDI-oriented industrial policy?聽

In short, my answer is yes. While Ethiopia鈥檚 policies are bringing about short-term economic success and showing promise for further industrialization, the state could arguably bargain harder with foreign investors, like it did in South Korea and Taiwan.Read More »