The Structure and Performance of the Ethiopian Manufacturing Sector

The Ethiopian manufacturing sector is still far from being an engine of growth and economic transformation. It plays a marginal role in employment creation, exports, and output, and is short of stimulating domestic linkages. The sector is dominated by small firms and resource-based industries, low-value and low-technology products, and weak inter-sectoral and intra-sectoral linkages. The sector’s export orientation has been low and stagnant. Based on evidence from the past twenty-five years, the chapter analyses the structure and performance of the sector and explores the reasons behind the ‘paradox’ of the slow growth of industrial outputs and structural shifts. In the mid-2010s, there are some promising signals that the manufacturing sector is coming out of the doldrums and showing positive dynamics. The chapter summarizes the challenges of building an industrial workforce and domestic capability, together with export capacity. This study shows a bias for hope, and potential structural transformation.