NEVIS Review No 19
Section I
 |
| Negadras Gebre-Hiwot Baykedagn |
June 17, 2013
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Ethiopian Macroeconomic Modeling in Historical Perspective: Bringing Gebre-Hiwot and His Contemporaries to Ethiopian Macroeconomics Realm
By Alemayehu
Geda , PhD
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Abstract
Much of the macroeconomic analysis in Ethiopia is hardly linked to the
country’s pioneer development thinkers. The latter, however, articulated the
Ethiopian development problems and what should be the appropriate policy
direction to address them nearly a century ago. This articulated development
thinkers of the early 20thcentury Ethiopia had captured the
imagination of prominent Ethiopian historians and their students. Ethiopian
economists seem to lag behind in appreciating the theoretical insight of these
pioneer development thinkers. This article is aimed at bridging this gap. The
paper will, first, review the economic ideas of theses reformer-intellectuals
and then build a linear model based on the synthesis of their development
thinking. The model is then solved to render analytically solutions that will
give theoretical insights on historic and contemporary macroeconomic issues in
Ethiopia. I argue that some important development concepts such as the deterioration
of the terms of trade of developing countries, the vicious circle of poverty
and structuralist analysis of North-South macroeconomic interaction has,
contrary to the statement in existing development literature, has its origin in
early 20th
century Ethiopian Development thinking.
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Concluding
Remarks
In
this paper an attempt to analyze and synthesize the works of three pioneer
Ethiopian development economists is made. The paper shows that these thinkers
might be considered as pioneers in development economics. This is in particular
true in their exposition of the terms of trade deterioration (which in the
development economics literature is described as ‘the Prebishc-Singer
hypotheses), the vicious cycle/circle of poverty, and creative adoption of
European development model to conditions in developing countries. The latter
view, which is referred as ‘safe modernization’ by these economists, also took
Japan as its model.
On the basis of the
idea of these development economists, a linear model is specified and partial
equilibrium solutions are derived. The paper thus shows not only the origin of
some basic tenets of development economics in Africa, but also the possibility
of formalizing it in simple but logical framework. The model formulation, it is
hoped, is also helpful to squarely focus on major development problems of
Ethiopia at the turn of the early twenty century. Such modeling attempt is also
helpful to document the history of development macroeconomics in general and
model building effort in Ethiopia in particular. It is further hopped that this
initial attempt in modeling could also be used as the basis for contemporary
modeling exercise in Ethiopia. This is a logical approach since the problems
analyzed by these pioneer development economists nearly a century ago are still
very much relevant to the current condition in Ethiopia.
(Ed’
s note- Alemayehu Geda , PhD is Associate Professor in the Department of
Economic in Addis Ababa University. His full paper can be accessed in his
personal website: http://www.alemayehu.com/Detail%20Publications.html#1)
