ECONOMIC FOCUS ALT OLA Bulletin of the Ethiopian Economic Association (EEA) VOL. 3 NO. 1 FEB-MAR 2000 Economic Focus is published bi-monthly by the Ethiopian Economic Association and partially sponsored by Friedrich Ebert Stiftung of Germany. GLOBALIZATION «& ITS IMPACT ON THE ETHIOPIAN ECONOMY Pai ee a : IN THIS ISSUE eae | @ GLOBALIZATION AND ECONOMIC DEVELOPMENT: AN Ld Lal OVERVIEW OF THE ETHIOPIAN EXPERIENCE IN THE 90s Paha a LU BY JEMAL MOHAMMED # GLOBALIZATION: POTENTIAL CHALLENGES AND Dae OPPORTUNITIES BY HAILE KIBRET rier 1 cinaiedioabaaad @ REFLECTION ON THE CHALLENGE OF GLOBALIZATION Se BY ASRAT BEKELE eae P44 LATERE UD @ GLOBALIZATION AND INTERNATIONAL FINANCE: THE CRUCIAL ISSUE OF AFRICAN DEBT BY ALEMAYEHU GEDA @ PREDICAMENTS OF INTEGRATION IN THE HORN OF AFRICA BY YACOB ARSANO eT eT Cy @ ISSUES IN ELECTRICITY SECTOR REFORM. pop er BY GETAHUN MOGES No part of this publication can be ee MR 4 coms7 23 eR nc ce 46 ee ee Peri st eten d Laman We PA hee HE ch AAO M6 Md ELEDI ADDIS ABABA, | asrass 128077 ETHIOPIA nail Address: eea@'elecom net.ctEconomic Focus Editorial and Letters to the Editor aay Rhee ee es Recently, ‘Globalization’ has become a catchword. Its use at times can be very con- fusing. A lot of works on the theme associate it with its political, cultural, informa- tion, technological and environmental as swell as economic dimensions. Notwith- standing the close interconnection among these facets of globalization, EEA's recent panel discussion, which this issue of Economic Focus dwells upon, focused on the economic dimension and its implications for Ethiopia. The main objective of the discussion of this theme is first to clarify the idea of globalization, if possible both from theoretical/historical and empirical perspective. Second, globalization may offer opportunities and also brings challenges. One needs to unravel these facets of globalization and attempt to articulate how a poor coun- try, such as Ethiopia, would design strategies to cop¢ with the challenge and get something out of it at the same time. The simplest way of thinking about its economic dimensions is to discuss the chan- nels through which countries are linked. These are ‘international’ trade and finance (and macroeconomic policies which are propagated through these channels). Moreover, the legal as well as the international financial framework that accompa- nies these linkages (such as policies of WTO, IMF, World Bank) are also important ingredients of economic globalization. Although this issue of Economic Focus does not exhaust all the above elements, it certainly sets the framework for future discussion. As usual, we will be looking forward to your comments and papers to keep the discussion alive. We have also the usual columns of Letter to the Editor and Economic Is- sues/Information. Enjoy your readings of Economic Foucs, Volume 3, Number 1!!,Economic Focus ‘Ray Rhee Editorial and Letters to the Editor ETTER TO THE EDITO ‘To: The Editorin-Chief Ethiopian Economic Association Addis Ababa. een ee | listened to the three speakers, save Ato Asrat, at the last round table of the EEA on globalization in utter disbelief, Is that ail what Ethiopian econo- mists/intellectuals could come up with on globaliza- tion? Globalization Is now a familiar subject in the rect of the world, and it is protty much analyzed in conjunction with the procoss of eocial development [not just econemic growth (sicl)] and all the mani- festation of underdevelopment caused and exas- perated by the process of market globalization {not Just globalization’ in the abstract). No wonder that nobody said anything at the roundtable about the impact of market globallzation on trafficking of women, on the destruction of the environment and ecological changes and the concomitant impact of the latter on the globalization of poverty, feminiza- tion of poverty in particular, ethnicity and ethniciza- tion of politics, and so on. This is indeed because ‘globalization’ [therefore development] is taken just as an economic phe- nomenon, nothing else. Though Asrat did much better in this respect, his presentation still re- mained economistic. However, market globalization not Just economic phenomenon. Analyzing this ground only, itie tantamount to completely missing the very essence of market globalization: hegem- ony. None other than the vectors of market global- ization, the Bretton Woods Institutions plus the WTO, will be pleased with this incomplete defini- tion. “Has globalization reached our country?" This question was posed, indeed seriously by one of the speakers who answered in the negative. One can't help think of globelization as a strange monster from the North marching en the Southil A few months ago | was completely flabbergasted when one government official said at 2 workshop that “Ethiopia will not be affected by globalizalion"ll A minister is a politician and not much may be ex- pected from an African minister. However, when an academic [and a Ph. D. holder at that!] flatly states that “globalization nas not reached the country’, is serous. Serious because, that person has no idea what globalization is all about. brief glimpse st the political and economic context or origin of the globalization discourse amply shows that the Giscourse began during a period characterized by the prevalence of the debt crisis of the counties of the south, the introduction of the Structural Ad- justment Programmes followed by a universal up. roar against it and the imminence of the end of the Soviet Union with a clear implication of the “end of socialism” and “death of Marxism” rhetoric, found the entire premise of the presentations and Giscussion flawed. | presume this is in the main {due to the organization and structure of the round- table itscif. More often than not, the issues that the EEA raised at the roundtable are more of a socio- political nature than economic. However, because izers seem to categorize these iseues as the gtructure of the roundtables includ- ing selection of speakers is decided on economic considerations. As a piece of advice, | suggest that the EEA also invite speakers from other disciplines and mingle them with economists. Otherwise, you will have a roundtable on globalization with nobody mentioning the essentials of globalization namely ite devastating impact and consequences on the ‘environment, ecology, women, national soversignty etc... secondly, ifit is reflection and debate what is needed at these roundtables, what is needed is just a framework’s for debate. And at such very short roundtables, much time need to be devoted to the debate than to the presentations. A maximum of two presentations or one presentation and one of Giscussant is enough to spark off debate, I Tekalign Wolde Ammanuel To: The Editor-in-Chief Ethiopian Economic Association Addis Ababa, Born In 1844 August 20 from @ housemaid who managed to find her way Into @ noble tamlly be- cause of the dream she had dreamt, Miss Egi gaychu, working ac a baby sitter in @ royal court, had seen in hor dream a shining light coming out of her womb. A wife of the king of the province of Shoa, Queen Bezabish, who heard the story wanted to be a grandmother of the future Emperor, as she understood it from the dream and encouraged one of her sons Prince Hailemelekot to have a child from her. Thus came Minilik into this world. Ethiopian Economic AssociEconomic Focus Ady ATEN Editorial and Letters to the Editor —————— Minilik at the age of thirteen was taken prisoner while Emperor Theodros, who briefly ruled the country, was conquering Shoa, the province and the domain of rival king Sahle Sillase grandfather of Miniik. In the eyes of king Theodros, Minilik won favor ‘while in detention and was raised in the palace of ug Theodros along with nis son. Even then, Minilik, as he had not been at ease in the presence of the volatile and cruel characteristics of Theo- dros, managed to escape from detention along with other prisoners from Shoa, most of whom latter became loyal servants and followers of Minilik. ‘On returning to Shoa, he had not received a warm welcome, Instead he had to fight his way to the throne with the de-facto king who assumed power in the absence of a legitimate heir. And in Septem- ber 1806 Minilik assumed power and was crowned as king of Shoa. Much of the history of Minilik, since he assumed power in the province of Shoa, was dominated by his effort to expand south, west and eastward and bring the country under one rule which was at- tempted before by Emperor Theodros but failed because of his extravagant display of power. In this Minilik succeeded because he displayed a high level of diplomatic wisdom combined with tactful application of power to conquer fival lords. Most frequently, he would epare descandante of the con- quered and local rulers and dolegate authority with a view to winning popular favor and saving the populace from the shame of defeat. When this is not possible he would allow the people to choose their own leader to be accountable in matters of local administration. Thereby he introduced the ‘concept of central government responsible in mat- ters of defense, foreign relation and policy matters while local governments assumed power in regard to local affair Because Minilik was very much aware of the mili- tary might of a rival king Yohannes who managed to equip himself with relatively modern firearms, ‘some of which he locted from Egyptian and Turkish invaders in the north, and some left to him by the British legion who had defeated Emperor Theodros, he submitted to king Yohannes who latier became Emperor of Ethiopia and who himself after many trials te topple him, has officially recognized Minilik as king of the province of Shoa and ite environs, After Emperor Yohannes was killed in a battle with the Dervish from the Sudan, the temporary power vacuum, together with other facts, provided a good opportunity for Italy which Was under great urge to search for a colony with a view to restoring its lost pride and internal economic problem and with the Vol. 3'No. 1 / Feb-Mar 2000 ‘approval of Great Britain managed to advance in- ind from the port of Massawa in the north. In 1691, with little resistance, Minilikt wae crowned ae Em- poror of Ethiopia. As part of thie strategy Emporor Minilik has entered into a tresty with Italy known as the treaty of Wuchale where the Amharic and Italian versions of Article 17 in particular was deliberately distorted. Halians gambled with this article to declare Ethiopia as their legitimate protectorate and accordingly they made this known to the world denying Ethiopia direct contact with the rest of the world. But the Amharic version of the tresty put Italians ae facili: tors in foreign contact whose service may be used upon the will of the government of Ethiopia. Emperor Minilik, not knowing what the Italians had made out of the Wuchale treaty, sent a letter to the government of Germany, to make it known that he the legitimate Emperor of Ethiopia, Because Ethiopia made this direct contact to the outside world, the Italians made a storm cut of thie citing the treaty that; “any contact should nat bo mada with Ethiopia except through italy”. In one incident. In 1890, Italy claimed to represent Ethiopia in the Brussels anti-slavery forum. As soon as Emperor Minilik learned about this he attempted to correct the problem according to his own original under- standing and acceptance of the agreement. Ac- cordingly, he wrote a letter to Umberto, king of It- aly, in 1889. Indicating the need to correct the article and accordingly informed all the countries which he thought had beon misinformed before. The Italians tried to maintain the treaty through various means including bribery of few local offi- cials and few expatriate personal friends of the Emperor. When all failed the Italians sent their messengers to the Emperor with the same wish of ‘saving the treaty from revocation, When the messenger know that the emperor stood firm, he very impolitely threatened the Emperor and his wife Empress Taitu saying, “the government of Italy will take even military action to enforce the treaty". ‘The Empress retorted and it has been recorded by a reporter who accompanied the mission: "/ am a woman. | do not choose fer war. However, instead of accepting a treaty of thie sort | prefer wer". Subsequently, Emperor Minilik sant letters to Euro- pean countries indicating the revocation of the ‘treaty. Some European countries, including Ger- many and Great Britain, thinking that Ethiopia ‘would be overwhelmed by the Italian military might advised the emperor to reconsider his action and abide by the terms of the treaty. CeeEconomie Focus Editorial and Leiters to tre Editor Now with ail nope of restoring the treaty gone, the Hallons prepared themselves for an all-out war ad- vancing southward from the north. In response, Minitik issued a decree calling the ni tion saying; “God in his mercy has prevailed mo ‘expanding ‘the territory and destroying the en- ‘emy...The lord has never let me down before. | have no fear either that he will let me down now. With tho help of God, | will not give away my country to the enemy... He who is capable enough let him come te my hols with aif his might. He who is not strong enough to go to war, for the sake of hie sons and daughters, his wife and his religion, lot kim help me by his prayer humbling himself before God. For hhim who may dishonor his country by not complying ro this call, | swear in the name of Saint Mary | will accept no mediztor ta whici he could eppoa!”. Emperor Minilik stood firm to go to war in spite of the propaganda warfare waged by the enemy, and subversive mission to buy off some of the local kings, in some few cases the enemy had succeeded ‘to put few local lords out of the scenario. Finally, Emperor Minilik marched to the north and had bitten the Italians at the famous battie~ the Bat- tle of Adwa, Before the world Italians had been hu- miliated, Thousands had been taken prisoners: ra tive Italian army personnel from all ranks and conscripts from the colonial territories, He had displayed abundant mercy to the prisoners of war. The moral standard maintained by Minilik in the midst of most bloody war was by any measure high. He kept low the vent for vendetta against the fleeing enemy and against those who had been taken prisoners by his army, He attached high value to the human race and always was not quick to en- gage in animosity because of his inherent quality to avoid unnecessary blocdshed sepecially between fellow Christians 28 he would most frequently re- marked. ‘The pride of the nation had been restored. In fact, in colonial Africa the sead of a new sprit of liberty had been planted, After the news of the defeat of Italians, there had been talk of Africans who were under the heavy brunt of colonialism raising their ‘chins in the face of the white brutal rulers. The name Minllik had been frequently used ae a aymbol of black power. He displayed good diplomatic stan- dard and noble quality in the very difficult situation he was in, considering the geopolitical situation and the provocative behavior of the European colo- nizers who dominated the region and whose desire to annex the land had been continuously mani- fested in various ways. Emperor Minilik had a humble personality, and w: farsighted. He endeavered to civilize the netion. He was in the forefront in the introduction of new ORE AE servizes, technologies trom Europe: the railway, ilecormmunications, commercial postal service etc, sometimes against the conservative attitudes of his own ministers. His zeal and seifiess quality to promote the nation was beyond any measure, Apparently, ha had not lived long enough to nee his vision for the country: a better prospoct for the coming generation much closer to the de- veloped world. His beginnings would tell what a reformist he would have come, vested with a natu- ‘ai and ciean wil to promote fis country. | wonder whether @ leader as genuine and honest hus ever emerged to provide alternative to the op- pressive regimes that had dominated the political Even though he has left behind exemplary leader- ship quality, evidently, Emperor Halleselasse, in particular, wae unable to take any lesson out of it. He left the country in abject poverty and subse- quent poiiticaMunrest. Indeed, once upon a time, @ time when the then sentiment of the colonizers that “black people are inferior to white people” wae at ite climex: gentl: ness, wisdom and high quality of leadership, hae visited the land of Africa in the person of Emperor Minilik iI and has more than discredited the fallacy which based on skin color. | take the pleasure to name Emperor Minilik tl Affi- can of the Millennium for his contribution in the ‘economic frontier too, Getahun Moges Kitle ANNOUNCEMENT. CI THE ETHIOPIAN ECONOMIC. ASSOCIATION IS PLEASED To. ANNOUNCE TO ITS ESTEEMED READERS THAT THE ‘FIRST ANNUAL Sie c UNE ae a cl toe eee Se NU ST tt ae PRICE PER COPY 1S-40.00 BIR FOR Bae aia Ce Dement NON-MEMBERS.Economic Focus ay kbeouhh Globalization and its impact on the Ethiopian Economy ——_—_—— In the 1990's "Globalization" as a vehicle for devel ‘opment has become the most pronounced strategy ‘on major international initiatives in the world, Ethio- pia and its least developed allies went through a broad agenda of reform and voiced on global forums with optimism to reverse decades of socio-economic regress. At this important juncture to a new milien- nium, it might be worth-looking at the progress made towards integration as well as the opportunities and challenges faced ¢o far, in erdor to prepare ourselves, for the future with the hope of deriving the best out of the process of Globalization, 2. GLOBALIZATION FRAMEWORK THE 90's In a very rudimentary sense, the economic dimension of globalization entails the process of intagrating an economy with the world market. The economic in- terdependence through such process encompasses: both product and factor markete involving transac. tions in goods and services, investmont and finance. The overriding principle underlying globalitation is beneficial to all parties in an environment of volun- tary exchange on the bases of comparative advan- ‘age which in turn is enhanced though specializa- tion. The source of comparative advantage for a country might be one or a combination of natural endowments and acquired endowment such as supe- tor knowledge and specialization. Tuming to LDCs, there seems a priori conseneus on areas where these countries, including Ethiopia, pos- sess comparative advantage- natural resource-based and labor intensive industries. Following the collapse of left-oriented systems, most LOGs entered the 1980's with enthusiasm to address their ill-unctioning economies through globalization, The general understanding in the above regard is that growth and development based on global macket forces will lead to a more rapid, widely shared and sustainable growth. The distributional dimension of development under globalization envisages narrow development gap between advanced and less devel- ‘oped couniries while at the same time helping to mz BLOAT GLOBALIZATION AND ECONOMIC DEVELOPMENT: An Overview of the Ethiopian Experience in the 90s Jemal Mohammed Head of Macro Planning and Economic Policy Analysis Department, MEDaC close income gap between rich and poor within a country. The two-part strategy promoted to enhance the proc- 8 of globalization In the context of LOCe entalle putting “once own house in order" through adopting policy and institutional reform conducive for trade and investment expansion while the international ‘community and most importantly advanced countries provide the necfssary financial and technical eupport {© ease shortage of resource needed to improve sup- ply side constraints. In this process, global institu- tions such as the World Bank, IMF and UN agencies play catalytic role. Among the widely stated global initistives include: the Uruguay Round Multilateral Trade Negotiation and the Establishment of the World Trade Organization, the UN Program of Action for LDCs for the 90s, UN-NADAF, and the Highly In- debted Poor Countries Initiatives (HIPC) for debt re- lef, 3. EMPIRICAL EVIDENCES ON LDCS IN THE 90°5 Generally, empirical records on the effecte of global lation tumed cut to be against LDCs. As per the recent UNCTAD report, despite notable efforts made on the part of LDCs in liberalizing their economies, globalization of economic and trade performance failed to benefit them. Thus, the 1990s were marked with low global economic growth, widening income ap between developed and developing countries and increasing income inequality within countries, Moroover, the decade was charecterized by increas ing job and income insecurity, and reoccurrence of financial instability and intensive global crises. For ‘Sub-Sahara African (SSA) countries, the adverse im- plication of 1990s was more pronounced as the pros- ect for marginalization becomes increasingly real and vulnerability to adverse development in global market increased, 4. ETHIOPIA IN THE 90's: THE CHALLENGE AND PROSPECT UNDER GLOBALIZATION ‘The opportunities and challenges = country face in the globalization process are partly determined by initial conditions including, the extent of integration RieEconomic Focus Bar khan Globalization and its impact on the Ethiopian Esonomy a cr nee seamen ee at the turn of the decade, the natural and man-made endowments the country possesses, and the ade- quacy of socio-economic Infrastructure and human I crucial for eecuring competitive advantage, Ethlopla: initial Conditions at the Turn of the 90's By all standards, Ethiopia remains one of the least, developed and less integrated economies in the world. Therefore, the challenge of integration is multi-dimengional, calling @ concerted national and, global effort to redress both supply and demand re- lated problems. First, Ethiopia, with per capita in- come of only USD 110 and high prevalence of pov- erty, stood among the poorest economies in the world. Likewise, Ethiopia's economy is the least in- tegrated in all aspects of transaction, Table nts Love of Integration indo Sa eae Integration | Integration ngexrsstss | "index [High income counties 728 3 Low and idee Income a5 ai counties ‘Sub Seharan Mica aa a, Kenya 2 3.0 Ethiopia oat ai ‘Source: Wold Bank Ina level of Integration Index shows the degree of open- 2 Both the jnltiat evel and speed of Integration Indices are composite incices of underiying Iniletors; trade to GDP ratio (dusted for population), access to private captal, change In ‘Driasa snareot GDP, manicacturing export share. Empirical evidences suggest that the degree of inte- gration and growth is directly correlated, For exam- ple, world economic indicators for 1990-95 depict the Presence of such a correlation between globalization and growth, Thus, the higher the degree of integra- tion, there Is @ productivity gain trom trade and DFI in the form of exposition and diffusion of technologies, designe, preducts and management techniques. Second, the low level of income along with high population growth and sustained environmental deg- radation forced the economy to remain within low- income equilibrium trap. This in turn has serious implication to the process of accumulation of human, and physical capita. Thus, the socio-economic infrastructure coverage is the lowest in SSA limiting the scope for exploring opportunities and face the challenge in today's global competitive environment. Table @ provides a falrly comparative picture of Ethiopia in the above contert. {In addition, markets most importantly of factor Inputs, remain underdeveloped. it is worth-noting that being Jandlocked and tocated in one of the most unstable Ae regions of Aftica further exacerbates the problem. Epon | ay TauPprewiaies, [oo 288] a] 360) 204 | | Tule opecanay aw sae Linyurs, 194). Theat ttteney pea] | |e, t00 af = ‘iciows sonenae ening} 3 |] ea Inercentot oe, 19) 1 Fartiner const fhurarederrewpernecee | ory | oan | rae | ase | Srantietane 802) Eres use pereapta Hi} Ta] a] aan | Legealnag tort } Tr pavedroaddenatyan [30 | 3] = 1 inant narainyraeipar [3] a eta, a) 5. eratnen SN pecmamarcearmie | 7 | om | om | uz ‘Souice: Word Dawlopnion Report 1A Third, the dud production structure, heavy reliance on backward peasant agriculture, narrow export base, underdeveloped private sector locked in the informal sector meant weak inter and Intrasectoral linkages and limited scope for change and hence specialization, Fourth, the failed effort to bulld @ socialist economy between 1974 - $1, left behind extensively distorted Policy and institutional environment hostile to private initiative and trade. The new regime which assumed power in 1991 hat to address the pervasive problems Caused by the two decades of economic misman- agement under the command economic system, The polices and strategies, therefore, have to acklress both structural as well as transitory problems notably socio-economic instability and failure of meating International obligation. 4.2. Ethlopl Globalization Reform Program In the Context of Tho policy and institutions! reform initiated and adopted since 1902 was managed in consultation with the Bretton.Woods Institutions. Therefore, the overriding tramework for policy and institutional re- form measures was in line with the requirements for globalization. Among the broad spectrum of meas- ures, the following characterize the key features of the reform, + The legal and regulatory environment has been reformed in favor of private sector develop- ‘ment and to attract FDI; The role of the state has been rationalized to- wards supplementing private initistives and ‘measures including privatization of public enter- prises and reorientation of public expenditureEconomic Focus Bay ANSI Globalization and its Impact on the Ethiopian Economy ee ———————— towards buliding the productive capacity of the ‘economy; «The mode of macroeconomic management wat tuned towards restoring and maintaining stabil- ity; beralization of domestic markets for goods, services and factor Inputs together with deregu- lation of prices; + Progressive liberalization of the foreign trade regime including, substantial reduction in cost- price distortion including elimination of sub- sidy and tax on export {except tax on coffee), removal of non-tariff quantitative restrictions along with measures aiming at harmonizing and rationalizing the structure and coverage of tariff rates; + Instituting markets for factor Inputs including foreign exchange; © Decentralization of political and economic power with the establishment of a federal sys- tem of government; + Civil service reform aiming at improving the quality and efficiency of service delivery by the bureaucracy. ‘Apart from adopting 2 broad range of policy reform fon the external front to facilitate international trade and finance, recently, Ethiopia has become an ob- server in the WTO. To auginent the domestic re- source generation effort, the government seeks debt relief and strives to improve concessional external resource inflow. 4.8. Ethiopla: Economic Performance In the Con- text of Globallzation How doos the Ethiopian economy perform since 49817 To what extent observed performance can be attributed to elements of globalization? Answering these questions might not be straightforward. and easy. An attempt will be made here to highlight de- velopments since 1991 focusing at selected macro. economic indicators. The overall performance of the economy between 1901 . 98 haz been mixed. Firet the immediate chal: lenges in terms of restoring macroeconomic stability and reversing declining pre-reform growth trends, have been realized. At the same time, the volume of trade measured as share of GOP increased substan- tially originated from export recovery and expanded import. The amount of external resource inflow dur- ing those years has substantially increased trom pre- vieus levels. Though limited, Ethlopia received debt relief in the form of rescheduling of arrears trom Paris Club creditors. The flow of FDI resumed after two decades of effective restriction, ‘Siow eal GOP, ete] 7 co Taflaton (annual average a7 | grown Export (ao GOP] Ex 7 inpert (Ratlo to GOP) Tos az Reserve Gap (Patio 10 GOP) 62 =o4 ‘Source: MEDSC, Second, looking at a glance st the above evidences, ‘one can notice the following preliminary observatior {ij the economic recovery Is highly-correlated with the growth of trade, (ii) the growth in trade was partly possible with increased availability of external fi- nance; (ili) the gain in GDP grovith by and large was related to improved capacity utlization as availability of foreign exchange relieved shortage of intermediate inputs and import required to reconstruct the war ~ torn infrastructure. Thus, macroeconomic evidences suggest that exter- nal trade and finance played key rele in realizing the immediate targets set under the reform program, From globalization perspectives, therefore, the scope for sustaining the 1991 - 98 recovery and macroeco- nomic stability, while at the same time Implement the human and infrastructure development programs launched, remains to be a zerious challenge, 4.4. Ethlopla: The Challenges of Development Under Globallzation Though the performance so far may seems encour- ‘aging the present feature of the Ethiopian economy made little progress in terms of Improving its. pos!- tion in the global market and hence realizing its fong- term objectives. Specifically, the economy is still far from achieving sustained growth, reduction of pov- erty, building resilience against external shock through transformation and diversification of the production and trade structure is still far from com- plete. First, the experience gathered in the past seven years depicts that the Ethiopian economy confronted ad- Verse terms of trade caused mainly by declining pri- mary commedity price on the world market. Second, the limited gain from trade was by and large ac- counted for by traditional commodities implying no notable progress in diversifying the narrow export base, Though the supply-side problems still dictate the performance of export, Ethiopia like other LDCs face the adverse effect of global trade practices that atfect the potential for expanding export of traditional products most Importantly agricultural output andEconomic Foci Ray RPTTHD textile, Despite the adoption of the Uruguay Round Agreement export of primary products faces a num- ber of setbacks including: © The trification of quota in DCs reflected on high tariff particularly on agriculture; © The practice of subsidizing traditional sectors, most importantly agricultural in DCs. + Testile and clothing remain to be subject to quantitative restrictions until 2005 even under the multilatoral trade negotiation; * Proliferation of unfair trade practices such as extensive use of antidumping action sanitary and phytosantory measures as pre-text limit LDCs export; ‘Second, though the flow of external finance between 1991 - $6 to Ethiopia increased trom trend level, it remained below what is needed to support envisaged growth targets, Morcover, the amount of dobt reliof acquired so far was insignificant compared to the extent of debt burden. In fact, the prospect for international cooperation and support for Ethiopia's strife for structural transforma- tion, diversification and integration tace danger as International financial institutions tend to use eco- nomic Instruments to enforce political will in connec tion with the conflict with Eritrea, As these institu- tions fail to comply with initial arrangements under the 1998/99 Enhanced Structural Adjustment Facility (ESAF), the flow of external finance in support of growth and poverty-related programs declined. Noreover, the process of considering Ethiopia for the HIPC initiative was delayed presumably for the same reason. oO He saiD HE'D WHAT MADE YOU TAKE) HIM BACK) FLOP) 5. CONCLUDING REMARK From the above discussion, realizing accelerated growth and transformation in Ethiopia in the present globalization framework poses challenges than pros- pects. Like other LDCs, Ethiopia is facing the ad- verse effects of the operations of market forces asymmetry in an unbalanced environment. Com- pounded with supply-side problems, the capacity of countries like Ethiopia to bulld competitiveness in sectors where opportunities ere likely for real Is cer- tainly far from adequate. Thus, both the empirical evidence on LDCs and the above discussion on Ethiopia leads to a conclusion that globalization in the 1990's posed more threat than the opportunities that it created, In spite of this, however, globalization is not an op- tion for these countries. If so, therefore, the first, best alternative shall be to explore ways and means to survive and maximize the gain from globalization. To this effect, thaprime challange shall be to develop and adopt 2 globalization strategy with a clear indica- tion of how the benefit from such process shall be accrued to all the players. From LDCs perspective, therefore, such a strategy shall clearly outline the way and means in which the long-term development objectives can be realized at the same time limiting the adverse effects of unfavorable developments in the global market. The overall guiding principle in this regard includes ownership, partnership and mu- tual benefit. The challenge could at best be addressed jointly through extensive dialogue and negetiation aiming at greater market access, reduction of debt, higher and sustained resource in‘low, and greater support for diversification and capacity bullding effort. HISMIND, FLO)Economic Focus Rar ANTENA Globalization and its Impact on the Ethiopian Economy Ramya POTENTIAL CHALLENGES AND aU ay Haile Kibret Visiting Professor, Department of Economics, AAU. Even though globalization has be- come a fashionable concept in recent years, it seems to mean different things to different people. The views range trom a position that perceives globalization as a grand design by the industrialized north to dwarf the developmont prospects of the least developed south by controlling the world economy by its transnational com- panies, on one extreme, to an eco- nomic linkage that fosters eco- nomic well-being of all countries (both poor and rich) by introducing free competition at a world scale, fon the other. My view is that these two extrome views distort the pic- ture, and honce such charactariza- tions are neither enlightening nor helpful in dealing with the real dy- namic international economic link- ages. Instead, | believe that glob- alization should be viewed as a mixed bag with economic curses and blessings. What Is required therefore, a "high priests" by the names of an efficient government, a dynamic private sector, and 2 cooperative international body h could purify us from the curses or at least minimize their effect and capitalize on the bless. ings. This may mean not accepting the bag in collaboration with oth- ers of optimize on the opportuni ties once the relative effects are determined. But trying to throw away the bag in one hand which has already gained ground seams unwise to me, particularly using 2 single hand (or few hands) like ‘ours, which are already weak and fragile. Let me state from the out- set, as | will try to show, this is LAER Se) something that has not arrived in our continent yet and certainly not in our country. The issue is there- fore should we fear or hope of globalization. In that spirit, tefore suggesting what | think is an appropriate pol- ley stance, let me briefly addrest the following questions: a) What are the most commonly used indicators of globaliza- tion? b) In what ways is today's global- ization process unique? What are the challenges glob- alization presents and the op- portunities it offers for coun- trioe like Ethiopia? and finally What aro the optimal policy options available to mitigate its ills and seize the opportuni- ties, if any? >) 2. MAIN DISTINGUISHING FEATURES OF GLOBALIZATION: There are at least five distinguish- ing features: a) Growth in trade: World trade has been expanding rapidly over time - for instance, it increased 540-fold between 1820 to 1992, In 1997, the total value of world exports was $6 trillion, b) Growth in FDI and capital flows: Growth in FDI hes been much faster than growth in both trade and output growth. According to UNCTAD (1996), between 1980 and 1994, FDI stock to GDP ratio dou- bled; the ratio of FOI flows to do- mestic investment doubled; and outflows of FOI to World GOP ratio 10) nearly doubled, FOI ie the largest component of total resource flows, exceeding net private loans. The unfortunate part of this process is, though FDI has been increasing, it is continuously overshadowed by porttolio investment (investment in Speculative capital or hot money) a8 opposed to long-term Invest- ‘ment (or FOI), ¢) Global production and con- sumption: Another feature of glob- alization is the increasing interna- tionalization of production, distribution and consumption of goods and services- resulting in Globalization of financial and capi- tal markets, increased flow of FOI. Ax The Economist noted, “by the early of 19908, about one-fifth of the total cutput of American firms was being produced outside of the US. And due to cheaper labor costs, many big western comp: nies will soon have more employ- ees... and customers... in poor ‘countries than in rich ones”. 4) Global Competition: global pro- duction is accompanied by global Competition (both in price and quality) among the producers and suppliers of goods and services. For instance, in 1950, the US ac- counted for more than haif of the world’s economic output...out only ‘one-quarter in 1990, e) Investment and Trade Liberaliza- tion Policies: In both the Uruguay round and in the recently held Se- attle meeting of the WTO, the at tempt has been to reduce both tariff and non-tariff barriers to trade and investment. Though not complete, the GATT attempts cou- pled with the structural adjustment in the case of LDCs have liberal- ized trade and investment signifi- EndEconomic Focus aay Ane Globalization and its Impact on the Ethiopian Economy cantly in recent years. These, therefore, are the most commonly used indicators of globalization. But it has to be noted, in addition to the above economic features, the political (limited loss of sovereignty of a ation stale as the influence of multinationals in the economic affairs of a country increases) and the cultural aspects of globaliza- tion are equally important features of the current globalization proc- ess. Having briefly noted the main fea tures of globalization, it is impor- tant to ask two questions: (1) How unique are these features? And (2) What is the experience of African countries in the process of global- ization? 3. SOME NEW UNIQUE FEATURES OF THE CURRENT GLOBALIZATION PROCESS: While there are some new features of the current globalization proc ess, some of the economic fea- tures are not new at all. To quote James Tobin, “Despite the appar- ‘ent pace of recent financial glab- alization and its spectacular tech- nological support, it is in fact nothing new, Finance was much more completely internationalized in the nineteenth century, particu- larly the period of 1870-1914, the heyday of the gold standard. Taking into account the new na- tional participants in the world financial markete, the pro-1914 degree of internationalization has not yet been restored and, more important, transfers of saving from developed to developing econo- mies are still, relative to the size of the world economy, much smaller than at the beginning of the cen- tury" Further, statistics show that “Capi- tal flows from the world economic core to the periphery, only $150 billion a year in the 1990s, have been less than 15% of their in- vestment and less than 5% of the saving in the developed capitalist SORE Pa TE economies. Thete shares are much emaller than comparable figures before 1914, when they were both close to 50%". In terms of internationalization of financial capital and trade, therefore, to- day's globalization does not seem that new compared to 1914. If Indeed this was the case about hundred years ago, what makes the current process of globaliza- tion unique? Ht seems to me the following cru- cial factors make today's global- ization unique: a) The first unique feature is the mind-boggling advances. in infor- mation and communications tech- nologies which make financial, flows instant worldwide. ) And such advances resulted in the dominance of speculative capi- tal over trade in goods and serv- ices and FDI flows. To get a picture Of this magnitude, each business day, $1.3 trillion worth of foreign exchange transactions are carried out, and ‘nine-tenths of these transactions are reversed within @ week, mostly within a day”. Note that this volume is equal to three months value of total world ex- ports and about 216 times the size ¢f Ethiopian annual GOP. ©) The enhanced role of muttina- tional corporations Is another Unique feature of today's globaliza- tion. Unparalleled by previous his tory, the UN reports that 350 tra nationals produced and moved 30% of the total world output. This is bigger than “the output of all the developing countries zombined’. 4) The development and the strength of supra-national insinua- tions that regulate and enforce economic linkages at 2 worldwide level is another new feature of to- day's globalization. Such institu tions include, the WTO which is attempting to harmonize the rules governing trade and investment flows, The IMF and the World Bank which prescribe how domestic economies should be structured and managed, which resulted in the liberalization of all economies 44 In one degree or another. The answer to the second question | raised above regarding the de- {gree to which African countries are globalized is unambiguous one. Though few middle-income devel- ‘oping countries (China, India and some Far Eastern and Latin American countries) and some former soviet block countries seem to have benefited to somo degree, most least developed countries (particularly African countries) are to date marginzlized in terms of actively participating in ‘the production and distribution of goods and services. Despite their recent attempts to liberalize their economies, none of the above fea- tures have manifested themselves in any meaningful way to dato in any of the countries. The mar ginitization is particularly apparent in the areas of FOI flows, commu- nication and information technol- ‘ogy which are likely to be the cru- clal factors in determining the future growth of countries (based on the recent theories of economic growth). What are the main reasons for thie marginilization: Based on the pre- liminary evidence, there seem to be two reasons for this: First, due to political instability, inadequate infrastructure, appropriate institu- tlons, skilled labor force, and lack of coherently articulated economic policies, African countries have not been able te attract adequate Investment flows. And second, even though many countries liber- alized their economies, the policy prescriptions advocated by inter~ national financial institutions moro often than not focus on short-term fixes at the expense of sustainable long-term growth orlented policies. These factors have contributed to the marginilization of African economies when the rest of the World is “going global”. In the case of African countries, therefore, what ever | say about globalization it could only mean potential and ot actual benefits and challenges that globalization poses. As the study under way to assess the de-Economic Focus Ade ART EIN Globalization and its impact on the Ethiopian Economy ee {gree of globalization and its effects on African economies demon- strates, at least in the countries selected (Zimbabwe, Botswana, Malawi) for assessment No trace of globalization in terms of the above featurcs was found. Hence let me ask the big question? 4, WHAT ARE THE CHALLENGES GLOBALIZATION PRESENTS AND THE OPPORTUNITIES IT OFFERS FOR COUNTRIES LIKE ETHIOPIA? Let me begin with potential oppor- tuniti globalization could offer the following opportunities: a) Appropriately acquired and cor- rectly channeled, It could provide badly needed Investment capital that could enhance productive e: pacity. b) Enhance easy flow of technol- ogy transter. c} Opens markets for domestic products. d) Makes a domestic economy more competitive by imposing work ethics, discipline and overall Productive efficiency; and ) Strengthen international divi- sion of labor based on comparable advantage. 4.2. Challenges that globallza- tion poses: If proper policies place, espectally jon period, globallza- tion may be hazardous to our ‘economic health, Some of these economic-health risks Inctu '8) Weakening or destroying what- fever little productive capacity there Is, particularly in the manu- facturing sector due to world com- petition. b] Complete vulnerability of the domestic economy to extemal shocks, particularly when the “freaky character” called specula- tive capital is involved as was re- cently witnessed in some Asian countries. ©) Loss of sovereignty of govern- mente to address dictributional ey and other social issues as they see it fit. This will be s rules and the sig transnationals would directly or indirectly put a constraint on what policies governments should pur- ‘sue. And d) May trigger competitive de- valuation and unproductive com- petition among the least developed countries since as it stands most of them have similar endowments ‘or comparative advantage. For instance, both Kenya and Ethiopia mainly rely on export of coffee and tea, 5. WHAT ARE THE OPTIMAL POLICY OPTIONS AVAILABLE TO MITIGATE ITS ILLS AND SEIZE THE OPPORTUNITIES, IF ANY? ‘ In principle each country has an option to either join the process or Opt cut of it completely. But, in my view opting cut of the process is not an option for a country like Ethiopia, or for any country for that matter. But collective action is possible. The only sensible policy Qn (if it is true that globaliza- At the Domestic front coun- lee should: a) identify and strengthen the stra- tegic sectors which they believe have a comparative advantage in, and invest in such sectors (as In- dia in the computer industry and Turkey in the textile industry seem to have done in recent years); b) Put in place the necessary insti- tutions which would help the pri- vate sector in its drive to be com- petitive and the government in designing its policies; such a co- ordination between the private and the public sectors seems to be in fashion in the developed countries In the age of a diminished direct role of the government on the economy. 2) Set-up an offisient bureaucracy that would facilitate emooth opera- tions of the economy: ) Design an economic policy that takes Into account the forward and backward linkages and links both short-term and long-term growth of the economy: ¢} Focus on skill development that ‘could easily adapt to modern tech- nology and negotiate skilituly in dealing with international (bilateral and multilateral) bodies, 5.2. At the International fron! The focus of policy should be on collaborating with similar coun- tries to capitalize on the opportun ties and lessen the negative ef- fects. Such efforts Include: a) Demand that they be exempted from maximum applicability of the stringent rules proposed by WTO s.fules such as minimum labor standards, competition and in- vestment policies and rules of en- vironmental protection, at least during the transition period. b) Requeat that international Instl- tutions make funds available to help countries dovelop their intr structure and human capital to be able to compete on an eqiial foot- ing. This will include debt reliet and other capacity enhancing measures. c) Work for the institutionalization of a new world policy regime that takes into account the circum- stances facing countries like Ethiopia. In summary, since it is at a forma- tive stage, we neither have the hard facts’ nor a reliable intuitive wisdom to say what the net effect of globalization will be. The jury is still out. But in the meantime, what is needed is @ pragmatist and a business-ike approach and not an ideological etance (which A‘rican intellectuals seem to be fond of), dwelling en what Is here and not the past (as some African politi- clans seem to favor when ch: lenged), trying to stand on one's ‘own feet and put ones house in order and not always sook for gov- femment to ball out (as some pri- vate business in most cases count on),Ec aay Ahern Globalization REFLECTION ON THE CHALLENGE OF CRUE AU ECS Asrat Bekele Representative of the Addis Ababa Chamber of Commerce Since classification is by occupa- tion, | can consider myself to be a member of the Ethiopian private sector. On the other hand, if somehow fail to “fit the mould”, 20 to speak, then you can take me a an imposter. | would like to start with the usual disclaimer. ‘The view expressed here does not necessarily reflect the sentiment of the Ethiopian private sector, Tor any of its institution, Today, it Is. dificult to rind a sin- gle word in any human language, besides God and probably Glob: alization, whose very utterance portends to express, or even ex- plain with frightening ease, the myriad relationships which up to now have been established, more or less on stand-alone basis, such as economics. Politics, culture, etc...nave now succumbed to adorning this “new” phenomenon; emboldened by phrases such as economic globalization, cultural globalization, political glabaliza- tion, etc. | believe the clarifica- tion, better yet the understanding of the basi¢ tenets of this all-too- important phenomenon _ should become the paramount objective ‘of our discourse. The applica- tions and derivatives thereof, will hence become less treacherous. Let us begin by heuristically de- fining globalization as, “The exis tence of relations between the different regions of the world; and hence as a corollary, the recipro- cal influence that societies exert upon one anotier.” This general and intuitive definition sometimes fail to capture the actual existing relations in the world of today. For example, the definition runs into difficulty when one has to explain the following application of It. “Hollywood influences the Massai, and reciprocally the Mas- sai influence Hollywood". statement certainly sounds pr posterous! However, if we look at the first assertion separately, an: on its own, i.e., “Hollywood influs ences the Masai, ..." then there is nothing ludicrous about it, So far, sc easy. The second part, Le. "dhe Massal influence Holly: wood" surprisingly, also has a grain of truth, however invisible. In the above example, reality dic- tates that the assertion as a whole is at best tenuous. Let us now take another example, which is slightly more provocative ang action oriented. “Hollywood Influences the Matia, and recipro- cally the Mafia influences Holly- wood." The hesitation to be de- finitive en thie one implies the existence of a symbiotic relation ship of a sort between these two enterprises. Hollywood has now become the single largest export industry in the United States. In 4997 alone it has exported 30 bil- lion collars worth of culture, or cultural products, if you will Similarly, organized crime collec- tively Ie estimated to grove about $1.5 trillion a year, globally. Out of this, the Mafia brand name, with its unique characteristics can be expected to garner a significant share of the above. The moral of the above exercise is to empha- size the fact that in the actual ex- Isting reality of today, relation- ships are either skewed, as in the case of the Massai, or more com- plementary as in the case of the Hollywood-Mafia connection. Going back to the above definition and using the examples which are explained somewhat pedantically above, one can then claim that Globalization can favor certain societies, nations, or aven cen- ters, while disfavoring others. For example, the United States, Europe and Japan can more of less be taken as centers on th ‘own rights and some relations which exist between the triad can be assumed to be more or less non-polarizing, ex, economic ac- tivities. In the case of military might between the triad, however, the relationship tilts towards the US (the US military budget is 30% higher than that of the total budget of NATO countries com- bined), and hence the relation be- tween ‘the U.S. and Japan, in this, power-laden, but narrow field, can be assumed to be a polarized one, political rhetoric aside. The interest of this paper is to try to elaborate what a polarizing globalization is or can be, and how it adversely impacts on all peoples of the world. But before | embark on this aspect of global- ization, it Is worth considering a more studied and biting definition of actually existing globalization, Globalization is: 1. The establishment of global markets for goods, services and capital. 2. It is the progression towards a global system of production. 3. It Is the universal character of competing technologies (lo men-Economic Focas aay ReTH tion some of the new tools- the Internet, mobile phones, media networks, ete...) 4. It is the political weight that the global system carries in the com- petition for global or regional he- gemonies (again to mention some of the new instruments-NATO and increasingly the UN, etc, 5. It is the cultural aspect of ui versalism (ranging from Holly- weod-pornography 10 sponsor- ships in sport ete...) Since this panel discussion is to concentrate on the economic di- mension of globalization, we will look at 1) at length, assuming that 2) and its repercussions are ‘somewhat obvious. The existing giobal system which is fundamentally based on creat- ing values, has in its core, the human labor as the prime maker of things. This “factor of produc- tion,” 3s you economists would like to call it, however, has no meaningful freedom of movement within the existing global markets. To illustrate by example; today investors can move billions of dollars across the oceans by liter- ally clicking the mouse. By the came token, tons of goods can be shipped from one corner of the World to another without a lot of constraints, But it is impossible, (except in cases of EU type elabo- rate arrangements with various Conditionaiities), to move millions of workers both, mental and physical, across borders of na- tions. Obviously, there is some interna tionalization of labor. here and there, but it certainly is not the norm. One can then say that the market for labor is regulated on the global scale, while the market for goods and capital are more or less deregulated. In trying to un- derstand the above, problems arise, as is the case with other plethora of establichment lingua in locating the regulation! liberali- zation/ privatization nexus. Ordinarily, we can accept deregu- Vol. 3 No. 1 / Fel lation to mean a prescribed policy, which atlows the strategies or large global enterprises (Transna- tional Corp, TNC for short) to es- cape the constraints imposed on them by state policies. Deregula- tion encompasses, among other things, trade liberalization, in- vestment laws liberalization, liber- alization of capital accounts, etc... Moreover, it is clear that deregula- tlon does not happen on its own but is rather @ policy either willed or coerced which has to be put in action by all involved. The institu: tions which implement strategies sre: from within, agen: cies of the impotent states, com: promised and marginalized to a large extent; and trom outside, depending on the agenda, it can be either IMF, WB, WTO, etc... * these To start with, these powerful mul tilateral organizations, which ba sically run the global system, only have a semblance of democratic governance, They are run and controlled by G-7 countries usu- ally acting as the steering commit tee of the assembly of rich na tions, like that of the OECD, This power-based governance struc: ture systematically oppresses anc stifles indigenous initiatives which are usually goared towards comprehensive development, i.e Human Development. This is par. ticularly true of the powerless and poor nations. Interestingly, the recent bold at tempt by Mahbub Hag. (Goo bless his soul), to basically insti: tutionalize the concern —that there is more to development than ite economic aspects-has gained enough support to be formally acknowledged by the global es tablishments. Amongst his ef: forts, one culminated in estab lishing an annual publication which goes by the name, “The Human Development Report", and has since become UNDP's ‘flag: ship document. Nenethelose, af ter ten years of solid experience, the publication still faces some resilient methodological problems which are perennially encountered when ‘maybe, the unquantifiable, attempting to quantity, Since intellectual respectability is asccciated with the capacity to quantify and dazzle with numbers, it is probably an excusable short- coming. In this regards, | share the view expressed by AMARTYA SEN & MAHBUB HAQ, that, how- ever vulgar the Human Develop- Ment Index is, it nas at least achieved its main objeciive, which | think is to bring the pre- ‘eminence of the GNP ond ite im postering into perspective. May be, it is time to have one from UNEP in regards to our natural environment. | believe, the pre. vailing disarticulation of globaliza- tion and its inevitable conse. quences among the inhabitants of the glove should not be taken Dy the status quo as an excuse for more polarization. The live ex pression of simmering frustra tions which surfaced on the streets of Seattle recently. might only be the harbinger of people- centered globalization Let us now turn to capital, the foremost globalizer of the lot ‘One form of capital which come to be associated with pro ductive systems and development is FOI (Foreign Direct Investment), in this form capital is usually productive, manageable and pre- dictable. Unfortunately, its other versions have become ingly fluid and disruptive. has In this category, we can include portfolio investments and other self-serving speculative _acven tures. Most of today’s global fi nancial transactions are not pro- ceeds of goods (serves) bought or sold. In today's globalization, as was the case in previous polariza- tion (Pre-1992 crush}, finance capital has transformed itself trom Its original base, \.e., trom being the means to becoming both the ends and mean of transactions. This intense “financialization” of capital is one of the major prob- lems of the existing glotal sys-tem. {n 1975, international securi- ties transactions represented less than 8% of GOP in the leading in- dustrial countries. Twenty years later, they stand for example, at 1090% in the UK. To me, money is. not just any cther commodity, (the view of the neo-liberals), but is rather the encapsulation of raw power legitimized by economic and social systems. The assump- tion that it can be commodified relentlessly, the way nature is be- ing ravaged and commodified is to me untenable. For example, the Sally transaction in the cur- Fency market alone has now reached 1.5 trillion dollars, which is about 7% of OECDS's GDP! To- day, finance capital reigne not only supreme, but is becoming increasingly slimy and unpredict- able, with an immense capacity to devastate a nation literally within hours of its onslaught. If it de- cides to abandon a_ particular market, thanks to deregulation, it can do so without constraints. ‘Commen justifications for its de- parture include, “the fundamen- tals” not being right or not made right in a given economy. The obvious moral peddied here is - economies should adjust to this loose-footed and speculative predator! Now let us assume labor (physical & mental) has the luxury of this movement Then like finance capital, it can move from one place to another looking for batter remuneration. If a particular place becomes unattractive, then it can move en masse, to another domi- cile looking for better returns, so tospeak. The initial impact of this ‘would be the convergence ot tac- tor prices on a global scale and ultimately (ameng other things, since labor is human), the har monization of the distribution of income on a global basis and the continuous establishment of equilibrium (at least non-polarity) across nations or economies. The reality on the ground is of course far from this supposition. Labor is regulated on a global ba- Globalization and its Impact om the Ethiopian Economy sis, while capital is deregulated and hence globalizing freely. This is the fundamental. problem of today's globalization. This global law of value, which restricts labor from mobility, is the source of foday's polarizing globalization, (unlike the previous law of value which was conscripted into the nation-states). ‘The multilateral institutions men- tioned above are basically func- tioning to. support and clear the way for the globalization of capi tal, which is being spearheaded by the TNC's. On the other hand, there isn't even one effective global institution whose agenda is the globalization of laber. Why such a vision is conspicuously, absent amongst the privileged of this system is understandable. What is puzzling is the reaction, o more precisely, the inaction of “the wretched of the eartht”, Unfortunately, the wretched are particularly busy anaihilating each ‘thor under the pretext of identity politics. Cognitive dissonances Such as racism, ethnicism, sex- ism, fundamentalism, etc... have now taken center-stage in the lives of the wretched. The inca- pacity to manage diversity within existing nation-states has. trig- gered the proliferation of “ethnic- states," or their look-alikes. Even though globalization hae been undermining the functioning of existing states, it has openly encouraged the formation of new and mostly “small” states, or "Banana Republics", to use a phrase coined by the Americans. Reasons or excuses abound, ranging from democratic aspira- tions to prosecution, actual or imagined. To those familiar with the workings of empires or he- gemonies, there is no mystery about this seemingly ambiguous and contradictory position, which, on one hand, creates almost “non- viable” states, and, on the other hand, destroys somewhat “meaningnu” ones, The political globalization of today has yet :2 show one example whereby it has induced “mini- states” with a lot of common characteristics to forge a shared common destiny, Given the cir- cumstances, today’s _ political globalization might not even spare the European project, which 90 far has helped to restrict the Euro. pean “nation-states” from engag- ing in belligerent activities. If Europe wants to assert itself (via the Euro initiatives), then it can easily become another pole, oth- cerwise, it will be doomed to re- main only a. common market for exchanges. The potentiality of creating poles can also. bring China and probably Russia to the fore. Only time will tell whether this multi-polar world will become a reality ornot. So far, the most successful su- perpower doesn’t seem to under- stand or even care about the aspi- rations of other nations that inhabit the world alongside it. This, | think, will cost it dearly. The British Empire in provious globalization has made the same mistake. Whether the US, essen- ially an offshoot of the British, will increasingly assume this same aggressive “Anglo- American only” stance is some- thing that remains to be seen. So long a2 identity politics rears ite ugly head within the wretched and has no potential to destabilize the global status-quo, then it seems that the self-destruction can go on unencumbered. The overused adage “divide and rule” is still relevant. On the other hand, if identity politics tries to overreach by. projecting towards the outside, in a consolidating manner, then it will be checked swiftly, viciously, and compreben- sively. Here, Islam fundamental- ism comes to mind. To me, real nations have always been confi- dent, incorporating, diversified and ‘somewhat dignified, but al- ways messy and clumsy. We can not always nave them neat and clean like Singapore, or Monaco.Economic Focus Ray he eLnD Globalization its Impact om the Ethi a These are more like “city-states” rather than ‘nation-states.” | also believe that great nations do not subscribe tothe small mindedness of the villages, where everything is either “us” or “them.” Experience indicates that respect- ability and achievements have always been the characteristics of real nations, like that of the United States of America, the United So- viet Socialist Republics, the United Kingdom, the Republic of India, etc... When great nations (in overall capacity) succumb to the myopic vision of the village (the "them" and “us” logic) then, they threaten to underwrite the impor- tant notion of “global village”, with their hegemonic ambitions, It ic my opinion that identity com- plex will not find resolution by Closing on itself. It is on a differ- ent plane ‘of reflection that we should look for satisfactory solu- tion, More than any thing, | be- lieve, it would require the willing- ness) and determination to transcend our primordial drive and objectives and replace them by new liberating seneibilitice, The competition should be geared towards achieving more humanity, not more bestiality. | believe, the ultimate fate of these “mini-states” is tied to the exist- ing political globalization. One option is to go the way of the "Na- tive Americans”, peacefully van- ishing from the scheme of thing: a la the international reservation systom, which is more refined and subtle than its domestic counter- part in the United States. Selec- tive migration (ex, DV, etc) can take place alongside this devitali- zation. In this category, we can easily place the resource poor, land-locked countries, Another similar option is to be- come a live appendage of the tem whereby their future will be actively and systematically con- structed by the prevailing global- ration. This might include, be- sides migration, the possibility of effective (sometimes geogrephi- al) incorporation into the eystom. Here resource rich and coastal nations come to mind. The deaf- ening noise of the ‘end of history" rhetoric reassures us that history has closed its door to the dispos- sessed. It will indeed be sad if this proclamation takes over the aspirations and ideals of a large pertion of humanity and bury them along with the Bolsheviks and their Internationals. So much for political globalization now. The means by which the existing global regime effectively perpetu- ates itself will be examined later, but now we will look at domestic polarity, or domestic inequality Which has come to establish itself as one of the defining characteri&- ties of modern nation-states. ‘The "Human Development Report” of 1999 has 2 wealth of informa tion along this line, and UNDP should be complemented for be- ing forthright about the data and statistics with which it illuminated the nature of polarizing globaliza- tion. Though, its euphemism is understandable, it sometimes masks and de-emphasize the sinister motives at play, and hence inadvertently discourages serious inquire. | will only extract some numbers to highlight the domestic polarity or inequality within nations. In 87/88 Ukraine and Russia had a Gini coefficient of 0.47 & 0.48. Hence by this measure, inequality nas doubled in these countries. In Brazil, the poorest 2% of the population receives 2.5% of the household income, while 20% of the richest receive 63.4%, In most of the OECD countries, income inequality increased in the 1980's and 1990's with the great- est Increase registered in the US & UK, ane the lowest in the Nordic countries. Today, barely 1% of Americans own more than 43% of the national wealth, and over 90% of non-residential wealth, Moreo- ver, close to a quarter of the Americans now live below the poverty ine. Economically speaking, the US has become one of the most undemocratic nation in the world. As a consequence, its other democratic pretensions not auger well in light of this extreme inequality. Like many things there, democracy has also become very capital intensive. Another interesting statistics is that a yearly contribution of 1% of the wealth of the 200 richest peo- ple could provide universal ac- cose to primary education for all (67.8 billion) In both poor and rich countries, whatever accumulation has been possible, it has gone dispropor- tionately to profit rather than wages (i.e. capital rather than Ia- bor). For example, in the US, the average real wage levels of today ere actually lower than the late 1970's. On the other hand, gross operating surplus, defined as 2 percentage of gross value added, rose from 28.8% in 1973 to 37.2% in 1990 in the US, In the 1970's unemployment rates started to rise sharply in the OECD countries. Form 1973 to 1983 the rate has already doubled to 8% and the developed world started to come to gripe with the new phenomenon of ‘joble: growth”. Today, 11% of the Euro- peans are unemployed. Corporate restructuring, (which usually means, cost’ cutting, downsizing etc.), mergers and acquisitions have taken the'r tolls. There is ne contention that labor is mercl- lessly devalued by capital, either directly or via technology. What ie not obvious, but real nonetheless, is the systematic devaluation of capital itself. This will be our next topic. Let us start by observing some facts about the OECD economies After 1973 (probably the beginning ‘of the prevailing global stagna tion) the rosorded rate of growth of fixed investments in the OECD countries started falling below that of GDP, contrary to the expe: riences of the growth decades ofEconomic Focus Aly RhTEND Globalization and its Impact on the Echloplan Economy Neen ee ee eee et the 50's & 80's. In the decade of 4980-1979 GDP grew by about 5% while fixed capital formation grow by 6.5%. However, in the decade of 1970-1980, GDP was 3.3% while fixed capital formation was only 2.2%. The first half of the 90's also saw GDP growing by about 1.8%, while fixed capital formation was only 1.4%, This has resulted in a steadily rising capital surplus within the OECD. Today, OECD alone generates about 2 trillion US dollars worth of invastible capital per annum, which is equivalent to about 10% of OECD's GDP! This productivity of capital is gen- erated both from the normal cost- cutting exercises and trom pro- gressive switch to more produc- tive technology, in other words, = long-torm decline in what you economists call, the incremental capital-output ratio. The offshoot of these all is that, today, there an abundance of capital which cannet find productive outlet within the global system. The desperation to find outlets for the mountains of cash has resulted in “finan sn" and speculative bubble whieh the current US economy amply _exempli Since the American economy an- chors today's globalization, we will examine its impact and sustainability through the eyes of its economists. ‘The American economy, it is said has entered a new economic ora of faster, infation-free growth and hence stronger profite, thanks to new technology and globaliza- tion. We beg to differ..." says Tha Economist, one of the most pres- tigious mouthpiece of the domi- nant ideology, “America Is experi- encing a serious asset-price bubble,” it concluded. This con clusion has been repeated in its numerous ieeuee in one form or arnther, but no body seems to heed ‘The MIT economist, P. Krugman, described the existing euphoria, "AS more and more Americans began buying stocks, there was a sense, almost a consensus, among sober heads that this was a classic bubble." Moreover, the new paradigm or the new econ- ‘omy argument which is being par- roted by establishment gurus is very shallow. “The computing and communications — technology sector collectively is only a mod- est 5% of the US GDP. The value added of Internet sales ~ Le, its contribution to GOP is probably little more that 1% of GDP." ac- cording to The Economist. It goes ‘on to say, “As the Fed itself says ‘There is no means of knowing beyond question how far this re- cent rise In stock prices repre- sents excessive speculation and how far a readjustment of values to increased industrial efficienty [---J, and larger profits.’ Actually, it wae not Alan Greenspan who said that. This ig an extract from the Fed's minutes exactly 72 year ‘ago, in 1928 on the eve of the Wall Street Crush.” On its November 6, 1998 article entitled “Living on Borrowed time", it asserted that “an unaus tainable build-up of debt may be an even bigger threat to the boom in America than a rise in inflation or a collapse in share prices,” In 4998, America had the fantastic private net savings of minus 5.5% of GDP, (which later on was clev- erly adjusted to # positive rate), Le., spending has exceeded in- comel (Not savings). Given that consumer spending accounts for roughly two-thirds of the US economy, this certainly spella a bad omen, not only for America but forthe world as a whole. This article concluded by alluding to the need for a divine intervention, “if America does pull of a soft landing, where others have tailed, that will indeed deserve to be called an economic miracle." All avallable evidence suggests that this situation is not only un- sustainable, but is actually a tick- ing time bomb, whose inevitable implosion will’ bring a massive devaluation of the asset value of capital, probably unprecedented in history! Surprisingly, the know! edge that there Is a glut of capital Jn the world today is one of tho best-kept secrets of the global status-quo, The means by which capital postpones its impending devaluation Include privatization, floating exchange rates, very high teal interest rates, debting the poor, the US extemal deficit (which vould have been intoler- able elsewhere). The case of the US external deficit playing the bubble is highlighted by another American expert; “An- other factor inflating the milien- nium bubble is the presence of the US trade deficit or the rest of the world's surplus. As the planet accumulates more and more dol- lars, it does not know what to do, except to sand them back into US treasury bonds or stocks. [...1 Never before in world history has 2 nation benefited so much from its trade shortfall.” Let us now watch privatization at play ina typical poor country, Say, the national electricity or telecommunications company has constructed a network of produc- tion and distribution systems at enormous costs when the dollar was worth 100 local monetary units. Through the privatization program, it is now sold to a TNC when 109 local monetary units are worth ten US cents. Moreover, the debt this company hes acquired in purchasing the equipment and technology at the time when 100 local monetary units were one US dollar still need to be paid in dol- lars at today's exchange rates. As if this is not a crude joke, the state is summoned and told that the equipment is not only old, put so outdated that they are not even worth-considering. Obvioualy, one of the missions of privatize. tion is to serve az an exhaust for the accumulated excess finance capital. But is this a massive de- valuation of the capital laboriously accumulated by the poor, what- ‘ever the reasons? To start with, and by and large, the state went Into “business” on behalf of its‘aay Abe Globalization and its Impact om the Ethio} ——— people, not because it wanted to, but because there was no one willing enough to put up the enormous capital required for such development activities. (be it, private local or private foreign), Once the groundwork has been established and there is some semblance of a modern economy operating, at least modern enough to attract private capital, then the logic and modus operandi change swiftly. Certainly, | am not trying to discount the increcible capacity of the state to create a rentier sys- tem custom made for cronies, nor its inborn inefficiency and bu- reaucracy, ideally suited to per- fectly mismanage and bankrupt the nation; but only to place the misplaced rationale of the private capital argument into perepective. To this day, we do not find private capital clamoring to get into the business of running schools, health institution, etc..(or even borderline profitable projects). At least in the developing world these are still the preoccupation ofthe state. Moreover, since accumulation in the poriphariss is becoming the Achilles heel of both the state and the indigenous private sector (If one defines a private sector op- erator as one who is a non-wage earner, then Africa doesn't have much else, | believe, other crea- tive means should be found for financing development. It is my opinion that the organized Private sector has its limited role to play (and this has to run its course, given the circumstances) in the development effort, in the meantime, state (ization) and Community (ization) (different trom communes) have to resume alongside privatization, albeit eff- ciently and prudently. It is also Interesting to compare and con- trast privatization in the developed and developing countries. In the developing countries, privatization usually means, de-statization ot anty monopoly, (read as anti ac- cumulation), tn developed coun- Iles, however, privatization seems to mean increasing mo- nopoly (hence, accumulation) by the private sector, Recent con- solidation by the TNC’s has given the concept “privatization” a new twist, in the tradition of newspeak, Today the top 100 TNC's account for almost half of the goods traded, globally! Moreover, the largest 1000 TNC’s account for 80% of the world's Industrial out put. Globalization js not new. It has already gone through various phases. The globalization of mer: cantilist era between 1500-1800 and before the advent of Industrial capitalism had a benign disposi. ton. Industrial” Capitalism (around 1800 and its beginningt financialisation (around1800) in the cores, and tarritorialism (the old version of celonialiem) in the peripheries, finally leading to the great depression, (after the crash of 1929) deserves separste treat- ment. Here, we will only look at the three systems of social regula- tion that heralded a new regulated globalization wnicn was at once multipolar and growth-oriented ‘They rested on three major pillars. The first was “Sovietism" — a catching-up strategy which basi- cally employed the concept of “capitalism without the capitalist.’ Mt was. systematically de-linked from the world system and pur- Sued Its own objective. This exer- cise which was on a massive scale gave the impetus to the second one and forced it to im- pose 2 limit on the commodifica- tion of labor. Historically un- Precedented, the second one ushered a workable compromise between labor and capital. This social democratic alliance culmi- ated by forming the “Welfare States” of the West, The third is the Bandung Project (named ater the place which cleverly leveraged the EastWest divide), It wae a newly and precariously negotiated and revised global _inter- dependence which gave some room to the national development agenda of the third world. | also share the view that these three pillars, which fostered growth and tangible human devel- opment on scale unparalleled be- fore. have more or less collapsed In the first case, it suffices to reit- erate the saying that “Today's Russia is a developing country, with nuelear capability.” The Wel- fare States of the West are no more welfare-oriented and the polarization within those states has become intolerable by thi own standard. If the West has “managed” to absorb the crisis better, it is probably because pro- creation has more or less abated there (zero or less than zero growth rate). The Third world has divided itselt into a third, fourth, fith world, and only a handtul have escaped to the category of ‘the second and the first work, Even those achievers ate now facing difficulty sustaining their newly-found position. What are the means the existing globalization uniquely has (again different from previous polariza- tion) at its disposal to perpetuate the polarity witnessed between and within countries? | will start by quoting Mr. Thomas Friedman, US ‘Secretary of State Madeline Aloright’s advisor. “The hidden hand of the market will never work without a hidden fist. McDonald's can not flourish without McDon- nell Dougias, the designer of the F-5. And the hidden fist that keeps tle world safe tor Silicon Valley's technologies is called the US army, Air Force, Navy the Maine Cerps.” I go even further and say that today's globalization operates under the framework of what are now called the five mo- nopolies of the system. In the parlance of the dominant powers, the boisterous Mr. Fried- man (and his likes) excepted, they are classified under the rubric ‘National Interests". These mo nopolies are 1) finaneial, 2) tech nological, 3) the control of the earth's resources, 4) the mediaEconomic Focus Ady RNS Globalization and Its f ict on the Etkloplam Economy and 5) weapons of mass destruc tion. Whether the existing global sys- fem can use the above five mo- nopolies effectively so as to im- pose its will on humanity on a sustained basis Is something that remains to be acen. So far, glob- allzation has presented itself 26 2 grotesque behemoth of _one- dimensional character which is ready to consume both man and nature only to spew out suffocat- ing monocultures in all sphere of existence. Globalization has yet to prove that it Is a thoroughly sustainable, prolife, human cen- tered, technologically driven liber- ating construct with a capacity to understand and manage the di- versity with which the earth is en- dowed In the absence of a global govern- ance which is equitable, demo- cratic and which takes into con- sideration the diverse global reality of today, the future looks dieturbingly uncertain! Echoing history, we can ask, “What is to be done?" Who can force such a de- sirable global governance to the fore? Will or even should the ex- isting (meaningful) nation-states survive the unbridled globalization of today? | believe these are im- portant issues which need to be reflected upon thoroughly. We can now tion means text and how Ethiopi have given the all-en« nature of the phenomenon. As for some aspects of economic glob- alization, it is not difficult to know or predict the most likely outcome such as, WTO. Unfortunately, like other deeper concepts, globalization has now attained | full vulgarization in Ethiopia, thanks to the daft logic of “understanding by simplifica- tion’. Today, it has become the rage among simpletons in the popular media. More substan- tially, and given the above prog- nosis, how can Ethiopia handle the sinister features of todays globalization? | believe Ethiopia should construct its transform: tion. Its reconstruction project, in the sense of The Melji, should look at Itselt trom the inside and devise an Indigenous vision. It should be positive, proactive and persistent towards it. It should reconstruct (I do not subscribe to the prevailing political gibberish about its past, hence, the word reconstruct), painstakingly but patiently. It should participate the populace. It should prudently manage the systematic offensive Of the global system. Most of all, it should persevere! The “why's" and “how'e” of the “rocenstruc- tion thesis" should be articulated by all concerned, whether they are in or out of real politics. If any- thing, at least it should deserve another panel discussion. At this juncture, | would like to quote one of Ethiopia's capable leader whose attempt in managing the previous offensive was somewhat ‘exemplary given the circum. stances. “We have received the arrangement made by the three powers (Great Britain, France and Italy). We thank them for their communication and their desire to keep and maintain the independ- ence of our government. But let it be understood that this arrange: ment in no way limits what we consider our sovereign rights." Menilik, against the Tripartite Treaty of 1906 (Dee 13, 1906, Lon- don) which was signed unitaterally by the powers, emphatically as- serting their interests on and about Ethiopia, The foregoing expose is essen- tially the work of Independent and profound thinkers of our time. My job has been simply to cut and paste their findings. if it has helped in illuminating some of the problematic of globalization, then the credit should go to these sub- lime teachers. On the other hand, It It has failed to enlighten, tnen take it as another case of, “trom the sublime to the ridiculous". | rest my caso, and thank you for your patience. I Ee lee ity i cet) oat te C0 ea ECONOMIC FOCUS. WHILE WE ARE PROUD TO HAVE UCG STUER Rata eeu eS HOPE YOUR SUPPORT AND CONTRIBUTIONS WILL | CONTINUE TO MAKE FOCUS AN EVEN BETTER MAGAZINE. SO PLEASE WRITE TO US WHAT YOU THINK ABOUT OUR MAGAZINE AND WHERE IT NEEDS /MPROVEMEAT.Globalization and its Impact on che Ethiopian Economy Shh Ere AAP? ALEPITT PATERE VAM-S LL aida Cae aU ea UME CoN ea Taco Poem ae. Vv, oS ab hay HPV eam ACF AAEIS Fo LATO AAI FO eZ athe PALEY och TAC abreast SLT CONT DLLSAE OF amie ar LH FANT NIGT MAIS ANAL NIC ob way vate TV RIC TRE" NAG Ue PEROT Wem? wher bS A. Poot om AAg? heaton PAag® anh PAOF AFC hark APS are 4 ANFFO ALA AmrAL PPa0d £0) OA APATHY Foran 2 CORT NATE THIET v0) PLP OD NIL 22IEF AoC M1910 NAN 1936 9.9". HAEP ANIL OG MAA Oo CAAT ac GMA MGT NOI ALTAIA KIC Laid PRE AeoMnes AFIO-PY” AAD NId- Pond Tee MINE — PRCT eda PRONE REM NORA AA FAO EE TUES NET SAAT eI we PTE WIKIA AIG AG TE eR siicer RACE ANIC mhha DE TEP AL Phowek IIE ovens lame act Ratner een A MARES bet Amorers TEE Awoert FS Fo 4 LUE a AGA a PARP mC! ny FUSE yO LL AI POE OMAN PAAT? mcr Tate AL NITE Vror Poa Dew VEN aye A CINATE NoLLH! AFA HAG LeTML NAV PeLAWA SS PLTARCHTS ONICE ahha AER 1.9 ATE NIC MAPR DLP Ped TIP 4 ADELE LFFMA OPES comorhe aatet | AL RAY Mee ARG merC bane of het of TH 2% NIST ANd mer RrAReme havior PrLoseats ANALY Pa eet LV. asa OYa Daa ieae raza er eer a Ua PERO CANA OFA BORN coweke ni AAA PUR DRED LLOANEG LLLNEAR CEASE AAP Ads beet abage IIT ER AC dwt USA} aw FINN cohha Turco EAA APG euF AMSIod eran wPMA AHA FUT war — (Security Council) -bewnet APE AIC PEM THO Sh EAE ant ahha INGE ey ITE NRE ees AAP APE PTH SCBA amcr+ PENS Ich amaeages OEAA hs AICE AIA PLEA THI ANECT ONCAH AMINED PANE OTH hea avantam atase Ree anaye oar me Al LFAA PEMA ENCE nembege CLIT BU NICE MATES ANGIE ML. LREN- TET PLR ehAee te ZEem AH Waly athe ANGE Mee fue AIS RCE: OU oe ave oF AA PEE AAT ron or PLAS eUnale OT ANG hee AAP wR OLR DAF AVC WAL NIRtmsom ANTES AIR 2g ET ASME AO BOE S2N adc NIA ALU Whoewdh vad LAH AL aIes deoeKe Arde NIKE O- — MOBOE 1) POE Harks PIPES WALT ENCE OF POAC UND TANT OGD Mn Bee ARP WAP ce oh TET hI anys eadier vac wir ERA femur AMENLLS FAKE hoi PHEe ahha PAG UT! AAP ANIL VLAE awy70% C hemark PILL HOLST UAT OEr MAL AAT Adie PUMereD Fe, PO6HOv9S — abALg Ahan RAD Tor APAAS CAREconomic Foca: Bay ADTUhe Globailzation and ks Impact om the Ethloplan Economy — ee Lanne AteKy AAI") AeA APART CAPT WRERY Kove AO L0%e tan er LOE APAER CELI CCAS TEP MANET MNLOLS MALE ALAAFo- Agkeh AAP Ae APPA. OPARCIO Te UAE NICE ARAL FO er Athe — hh ARFort UIT S FIT — WFO — dorm hee Aeahht ANeCT AREXKY 2q NPANTHHO FINA ASKATP “AT Tec Kein has NIKKO ANY LCR ARS vAIETE MOTE Dh NIRCT CAAT ASE RCBRED corre NReree howe rane ATLANIT Ate® VICK POPP TEP emLeCI A FLMF ATLL PPAMIPAT WL OLLC yore ATH NIALA SUTP areC% “TET ADAG, tarts L ANT LLe AFRO DART Lo AVIC UTFOT Nie sa ers PTAA! CIACar! CoFCFG abIATeT NCH PINAY fous! NowITE AA PAPC PaUC Peeper? aamrnes” TOP ALPUIT APA Ute AAT APE ORC Foam OANGL Pome RCE bc BUSA DALI ICE vA ACARa anagy? APE IVES REC he PRE Eaneaerax LUT DAY PMNEE AVEET ENING OFT WIE OT PMN VME NRO OPE GO) NIA OOTARGT NEP TE AF come? LECOAAT $29" AA PATE ACERT ana HUI NUD ote LA Soot DIRT PMs VIE NAA VINEARC DINE hid FIC LY wwe PNIL VIA PLANO LLPT Oo LUTE FO NEG OGL ATE ULE NET NSO LU IO tite Keote FU% PV VANE MCUTACE? NOIERT ANI? PMEL ANRLT MAES DAM AETa-T LEE PLPHET ooh hd PIR how. GET NOPAY PPO MOTI HKAT MHS Waa? PTH RCH Ade TTT LECHPA LUF LEGS AL PEN CO TIC PHOT PMR AIL PHL DINE abies? NIE Tt SREhnras DLT LABAD Fat nae sek onay AEm& NTS Die CLO 2 POLL OLAS PIE a errr ease ANU Ah OLE PURO NTF IC Yo PLA Tee cont SONY VAL Oe TORS PLAY hero SCEPY 26 foe FS ECHRE 2c makhe. PF FG Lmmnl ELSA Fa FIG (emo WAT PHISEK roe NIRTOr FOLK UI AMY LCEPET NICE APA FRC TELE oes YO ATAL NAom ICE fhe AEE PLEO ITT AIK No Of Ad AAP PLAC APIA 15 hoe® Pro yoru HLF AL FoF IN ARK eC > Mito eC NIE Of 2c Ag mwah AIRAANFO vIFe LRVIAN ky FIC MAUI yncR 496 TF FE ePLooME AAT MS TLiinw FCP ARTAFO M5 how MI AFF toe aU? ARMY FON aH ARE NICE Pho vas LUFF IRA Aoobaa SAISEPAR APA RICKS ote Ph APT 15 hot NP AFo PPuCT 14 oh Poo PARED Phi? hhvy eLIOF PAPA yc TH EREP VAL UT NIE VID Nemd PIG AIA PNET GATED LOT srnnt Reh ae nna Te phe ONE Of Ned AAP SLATE 17 10 rev APAFo tox PAKS Aa-kith aan DEEN 410 AT HWE MAA PAD yo NIRAGE Din eLerdos NIRA NICE SA hwy ASIN FO nis aor OFF Fn ARES endo PLsie RCEAT erigeck? Fee GAA Ins AwRRE oben rant rn vat To Frc vas~r nick hev Mek 26 POAC PUSTIATO Chie conbhT PORT hOLLC OF FLCIPAY AFA Lu NICH APICHF Nacrace PCE choot) hack Abam Ae ACHP IFO) Fad Année NECr wa AFRCITO ATEUT A AALFo® NLU bat Pec emt anne MeFio Whe neiFe PCre 2c DIADARG ALLELE OPH AONE ROE NI@ARC tho AR AIT? MWALANFO Che CONTI? (WU aL Fore. ALLOY KAM NICE AEIT LF Oper TAGE OWE che oN Chase eT AVA EEF Eos Sine P2a We tte nea bP rmckah 92 AF to ATIF PP at OLP ek AINE? — eLNOTEY ALLA ake base ebhth —whect dome WEP FEO? LIne MAMIE KAGE NICE MAT OLA PGE? Rick emer ect ASHCANTANIN NTE Te AS ARCH oO" ALUP? Sos PRT PAM THOT APSE FHEALH FAT HILT? PEA NIZ ARNE OCA BHT Oe OP hmdh ANF IE PToH IHU AA NIG FIC Aa PF MCR noe MS Aomeio tar ners Atca ASTAT = arta TRITAS oF aero Atmsta o2F Ambo actit Tc haw Loe fio PANELAT eee mC NGAFo CREPE nor POKES ATTEconomic Focus At ADT Eh Globallzation and les Impact oa the Echloplan Economy AIG PAM LU IR were awh naw LUE DTERE ONT £0 AMEE APCEE lik $2 PCF Tito so PLsheThts Cae NICE Fh ANEAET 7 FD be ALEy 92 be Fk qowrsse nw LCERE PAWUEYS FC PLOT Rite WPL PD AF yore NAV Phtero 72 ro AVIAY PAN? PO PUNO ALAR! LAE Met mer PLEAS POT PI hroctar AnOH, CLI" WAY AMMLET AP AA VCH APO OPT AA he PEF TOF ETE ALT HAAS? AF ate PC to" NELLIOG Adm MICK £6 SCRE MILL ELCTE NMAC ALF 92 PEP Io APOE aw vace QARGo ahh AIOALC ALAN a Vere VNFOT GAPFO AF ATE AS FERN O DEI AGIE AP ome ITE AT PCLT AFP NIC Th ATIEED ATE mad DAN?” 1 WILL TAA PAK 8, WRLC NIL WILGLOD PLLA IO LLC VIC ah ATL PTA PML NEED KLM WIPE dove AAT AEAPE ACHTo ore 2ecrFrax AAbTo- ahh PAP AILK ERIC GAT WF IR MISLD AA LU FF MT dor MAES > TOI FP MGO FIP TG ALECT NA to APPA FFP NVA Wt ACTOS LAF PAA TPL ALU ATMA PP YEA LPLIS NPL ALD DULY de LLLIANKF ATID AF RIGEFY ARNTANEE ATA HELA oF APART LPR MHF oohatH VI CT NEO AIM SAFO OL FARNIO? TIC TP anc ARTE ANAL fu Feneh noha APS PHI Phd IPE OR TALE eae mde PML oor AF eA Akay ATE DLA AF gare PANS eh MoeerC PN FPL MPa Nemdm Ad AL ote PAF AIC ANGE to AAPG ANE ANAL FART mHee AU AR PLAPE AU ANIC TOF ACL FoF mAh orgs moet LFCAFAX Naar 0420 “77 LP ETAT on ATHANADD! Pann 328 Kbmahh nowKomse 22M hana DL AIC MAT PLIEM TeMThat ohana OE V1 ALFA hark AL ALPE AL AMA PLFA hEtTa $27 hhro 7 20% (we feet) oonaT fants uate PIG OAT APOE TI NEE MALT AML ALLIED TS eoUDP AIG OT theek ri ANA 22% ho Norm Theme DC masKe AAFo le keC hehe Pak WBA Ade WAP AF yon Lith ote TRH PRICT ACT_ VIC MULE Qa, DAE SAPTAAR ICES RIK DAES Wt Pom Oe KATO PLAT er? Vol. 5 a ry FAMPTH LONIEIT AC RMT ANTINELE FP MEAS? SAENE LUA HEAT TAHT AC RMF IIE LECATAY PIRI aCUIACS AreAhh ohZrear AAT Poh NALLT ee ehh KAM ERIC ATT, NAAAC ALU PI IALIC SMMC os “LUPE NIST FE AARC PLAID THA emir! OAR? IEC NILES es ath LEARN FIG ATI FC Pome Hct ATT AIA ALTE wh ALIGN PDA AWA AF NAcoURS eC ArZh aN AIC HAP aLTC PFD Ie Abe FILA OUND NACLAD Ea yon POINT EET ARDTor@ oT FLT EOD UG Abeaht arty ate tons FAOPARC 1G PED AF NIANG THI nants PIPE PAG ooh Nome AI NEA obo LECAFAY RAV RCERTIP covtin LH eecaran 20 92 on Fac ANE MomZoes R28 CI HEA NsNLAFo hace FAC PLLA YO! NIL NE AK NICE PT HEA LHIG AT £087 Nowr Prosar TATE DDT O ANTE SIO NRO OLLIE MAN AOTETA BY WA VL oe AA APC APR 29 Ado Fre ve aant VIC POTD CATE LCRAT eR M Cane APE now TF LUI? FIC ELEM some AMPRSOLT AAUNEE PeOTTNED — FAT CHEF Poop APP AVEO NPA 10d Peters FIG ran oLh rer DEPT Ne ATE Wo _LLAwIP FAL ator av ShAA2A® — FIED oe. NOTES PAPE TN OWT KA AAPRLOLIS Poe QUAFE vitor tooF PAO oPhA TELEOT MARA AHP THT POW He AMO 226 NEEM UA PIPE ABET ONLANC AATSFIP Uy AADT TL ALITED NEE AM FRCIAS Mae RICE 77 Lu A ILLAT RIFE Rear NIC HEMI PF erect AR aR] kre Prk The CALE OUTED hovbehP VIG OF NICFo- NAPY WP Ford ATT APIA THOT horn Pan ROP so » NT? IC oO ORE? OmtA Py hw? LAA? OARTZo- ANT IR NIC had AIC IC AROARCT® — APF LAA AIC ASoocteee DIC ALYIRTN ANGE? TAS POE TING PIE We? UTEP AATKE wT Lowder RM APT EERE RERATTE — aaF Fob Ak eh NAR POP Fo Peachin of on rieate lL APRS ALRNET PP TTimon MAAS ode PLIC TF OR OP lovlir PrN IK DP AATRAS fT fleto? AT DTERS ALRAET PPFoctom ML FN EzEconomic Foces AAP ARPeRhD Globalization and its Impact om the Ethloplan Economy SN eee arth gti AAO NPL att NICED Pho ve Bho rom NLP vy EOb NPIAUP wy Koco LZWLI vy MALY REmCEP PL Lock NS CLEMENT NIC She RCRAE NPL Neorg? ANIC OLA RAPT OLLC LHC AMA AAEE RIC EN AMEE tome PCr WUsHch AA AIG Mh AMEE 2c LOARC At to DAP ARE P@ARC aeLAAN® A AAEAS HET NAeRAHS bEcow WAIPAA HLCAL NAL ot IC Fore At Ak ATRL oT Fh SCEEE Nay AIG he taenae PCr ATF RCEEE 9G ROARS “Mt Un we ror paws OLRC ACEP omhha ov, hoe CMEES CREE hina NIC MALT hiro MIC CERF IC tOAKLa PINE AF HFo- Py PUA 0) 1F IC Fe LCKPE NERC No IPE MPGard ONT AL AACN PLEA VAT PIR tor? CL TAPE gt PIN, roe WARP NIAC ATP AAR OT Ph CELE Now aas woes FFon NIK aber OLE AFLEF Lh PaCHAC 4Ndh PRIS hawk Fem OTRAS Aare FOR RIC LONMA: Aad NAC ANAK E Ph Pacrmce LCP Amrae Phook Tea Wkec NAN UAT ICT POLIT AYE Tae anen noes eM SOMar? NPT Agiigne KAPHE aT hat RCE FA Miko LAH | Pach RCRE Hors Far yar MIF APA Pemba Fox AED homer etme AAT aves ATALF PAY PAR? PCr ee 2 eon Foes AIPA eLwma oa joe MIT? AL AP Bosco POR LenAarAn PPAF PD Noh come TAME NRG Por Pee vos ONIS wee ah IC: ay PMC UAE NCE eiere Ton AWE PEI. Pom USAT ilese ates SFox ot Ph eachPT Analy oA TANEE NET hae FPO" ANIGED St Th tmetS TP VCAT — heamsyr AP rabwer oes NAG NET AA Poy MT? Pn @ CMILEOS PAteT INET PCA WAKE NALTY PIP LF 9209 ALP com> NE LAAT ULF FI PO APE CBRE NI ANAT ME ANTI WE AIRKVEO NEFITS Newry? LF v7 qvUe NET Lae Thin PUNAIO IAL UP ANI 22% PrIC one ne FEy ARI WES PHT hoy eo SCRRE 2C ANA Ue FOR WAI SNA NW ARG Fo AAO FATT so ALY A ORC oT DOA 0.20 PRIETD 4AHPT SAFo Po oot AF yon FE PLY ot PIR to? NeKoone 22% Pb sehPt ons Wt AUT A AL SMT NePEE ony UN LU NAT AEPETT AtNaFos FIC Ae OMA LUGAX FIG OLY AF bonT ALPCe Nee FONT 7 AtN Aner sonbaas SP we PM het io OUI PeLOP UIT PINT FFI han ours. ALecoe MUP AAG amt PNICI ARM ePLPbAT LUGAR NEE DART PPTEAO ACO DEA ADT ATE AF ney aArEnre PANOTE AVF HH NG TI OLKG Tt RTA? ofer nant Laer eto ro SOA GA RCERE HALLE AMY abr POF GAPS FD. ahd Chk VAR UF PL LUGAR PADAT NTT LPH AAMPAL Kho NICE MUTE ILA ANIC ATES wa ge ARTE eA Aew> PUSAN T NOT (PBA sore om VARI AVI TP wdT PNG hawhT AA PANE coe’) PPLE L7G VET POLED rt APD MOA fay NICE TRA ean FIT AMOS FM OM oo PPP WONG AIM ach vu LUI TET AEM deer haeFe rw — Poet Tar SMA NeEE $A Leow AM Ate MZhC ARRAM Hd. hie PHIL AEA BLACKS AA ALFAPs — Rim nkvrk eranppar we FEL FICE LLCING RAM — LUT? SLT NY NOL APCEE AEP HIT Po DALE AMF wT PTD SUIT thor alt 7 wt% ove dna SAChPFEY FHF ewhahes AGA ALRLINEO hoe Loar — TCR WPORLA LHACT LAID ANLYI? eA wed hee LOGO LY GU FAOEP PAO Poets UAC wT dents LaRAAH Ae TREPTIE PLS NI MAMPre Povey oc FOF NAT Piso? ort NTACT AAMAS" AANE HFT AIAG LARAAN ONIN OEP PA COT RPheALE ALLAP WT vow hiwP AA NIKI ALE MPI ret AP CR ASECAPH PHT ACA Ralkd heed AMEAEN — downy” VUE? eT hoor LRAT 6. FF R27 ADT DAZ AMM AGRE PAAR ADT GHA? APE ALM GOT PLACE NeeLIIS AeA ALT IO LEC WOH OREOLLI ANKE hha Aee ARNT WENT HHA ton amt RUe% h>C PLLLTE CO's TAS Yon AA A RIP NIE MC NG WIE hase TALE ATC ABPAPA hth orc opt oiit eFcarAH PRE hoo mmot AR WIT MAF tT FC MAFAI KF 227 AGH PLA DFE EHR sar OA AEC 1 VEO ML span ORCI LIANE FIZ Ame ROR ev Amkwes mer FE eid 30 wLF 40 oF 50 hawk NIZE CH LCA ASIP NIRLLAT OLE DEFF OG COBALT at Neve ATERE ATG NIRA MAT OL COR AFG For LAAs RY ode BRE Yann AIL ALY COR NAN RIC PFO nat baat Bae AF LUSAR By hey 27 MANIC ATE MAI KE OTA “TAN ERP PRA TIC ABRAM Onto 9A Net Ne Kaeies AGM Het Pid AT hows NAC Naot PY oogen AA PLA TEE OTES marcaG LTCATAT ALU oo WETS Nil? TF Nowe Nes IF ILD AE FLAG TS AN PIAS aD” Ne LAO NG F) aeMRAy PLENTAD BUTA “IN AIRY ALrk PMP Pew AF ages Globailratios and les Impact oa the Ethloplan Economy ———_$_—_—_—_— i hawt Mick 2c PATENT ATC? PROF TAP Lenton sur ewe ehetio? ANT 9 RT NAA hake ATLL SO Od IF NIRAT HF NIRA ATOP SNFATAR PRATT Cae PM IMET OD WAG AAT NIPLAATE AAA ANA FAATF baw F dace rIRT TTT RITTER NUT AUF WT AT emteh RTCATAS LUT heme NICE IC Ce a a ed POP CATAR 2099 AGo* hAtet AVCE 2c PPERCI@O RCRC ghee LEIA Ah yan ARCEC OR oa NICH PIAn PLDERS POMNTTES — UVTEMTIT — PULLER ATT FAL NLS TIE OS Ado LGR An Pha AEE amNAPE Pere PAREAL OAMEDE emoIG Tiere NONE Aes OLLAA anh 99 ONAN NDAATEO TAR mmee MATINEE +e Phict TAP how kt ALI san CIN oor NecarFo * goonnan ——anluy? haath LUEEAS TF ENIC AAT IPF COU NIAAA htes hhetot herto ras 9 RCD RIRLWFo NL LO* AFTEAT OK Ot FAIGHOD THE AMINAAAT NEFA AVIAAT FIC LIUTTFOP PLA NIE KOE MY ULF AL Phower ANPAEE TPE MELO Th JOH ALA US 7) NEF rrrmit OL 1RF OPTION Tor APP NITED OEIC PINT EY? OF VK ton vine Agu PRACT hay WE £0 Tobe PLENL AIO TAL to Pz esEconomic Fo: Bar Aba wn Globalization 2 GLOBALIZATION AND INTERNATIONAL FINANCE: THE CRUCIAL ISSUE OF AFRICAN DEBT Alemayehu Geda’ De Cae eh a LCase He VLU Thie iseue of economic focus hae attempted to explore the many facets of globalization — a term which seems the most illusive. One approach that could help at grappling with the implications of globalization is to focus on specific aspects of it. In this short article, | will focus on international finance issue, International finance African context ie fundamentally a and its concomitant result debt. The modest objective of this paper is to highlight the severity of this problem at the continental level. In this paper, | haven't attempted to Table 1. Major Debt Indicators for Afri analyze causes and propose workable policy direction. The interested reader may refer to. my forthcoming work on this issue (Alemayehu, 2000, Chapters 1, 9 and 10). African economic probiems cai be seen as a complex of interrelated factors of an internal and external nature. This article focuses on the latter. The extornal finance prob- lem, and debt crisis in particular represents one of the major prob- lems facing Atrican nations today, As can be seen from Table 1, the in Billions US dollars, total oxternal debt of Africa has sen nearly twenty-five fold from 3 relatively low level of US $126 billion, in 1971. to nearly $300 billion’ in 1997. (Further details of this debt are set out in Alemayehu, 2000). The major component of this burden comprises outstanding longterm debt. Ouring the late 1970s, and early 1980s, IMF credits were increasingly used, with ‘Struc- tural Adjustment! and ‘Enhanced Structural Adjusiment’ facilities comprising an _ever-important component of flows to Africa. unless otherwise stated) _ OL ~ i865) 1980] 182) 1888) v9BK] 1998] T98e| aT] | I a a aoa) 36] — e663] “are ea] 10820) 12761 27) 27538) 201.23) \Cang-tomn External OBI Fata) Muttiateeai(00D) East ane Souther Aiea West and Geatral ica Ui Atiea Biateal [tonite West and cesta Afica (—arataes Private cresers BOB) ‘Esstand Southern ivca — orth Afies a al West and Cental Aiea a3] ala als —a7] 0 Tisteatand racipalArenva Persea ot |“ astane Seuthern area a ‘a, 3247] Bina | nom aes [at ‘al 931 047| 0.5 Wiest and central Afion [sf af a a Beal 44.00) 23.68 i Atnce —_ Loita #8 22 ea ‘Source: Aemayen GOO} “Thanks are due to las Kedi (my colleague and rend in the Department of Economics) fr helping me update the da'a during last summerEconomic Focas Aa AbTuAD Giobalization and its Impact om the Ethiopian Ec. Table 2. Major Debt Indicators for Africa (in Billions of US dollars, unless otherwise stated) — ‘a7t| 1375] 8651990] sen] ona] — toa] tiga] — ise] —caa Wel Tanster on Dat | East and Southern Aca a a ao] | a ‘orth Aes aa aa rt West ana Centra Ae oa 33a aos a hao aati eo] ta tif a8) 9) Pgegate wet Tamar Fast and Sothern Mica aa an orth Aes a eT West ana Cental Aiea ane a anos pzenage Gal gras) aetna Souther Aca 302) ae) 2897 ort ies 3019] —2e| ona West and Geral AEs 34[_— sal sa] ‘ai ste 7 XC Deb EOTNGRP [Teast ana Southern AFTER = 6] aaa] zea i Alice sil 13] — 77] ora West and Gena fies 3a)_—ae4] sae] vas ‘AAs 90) v1o) 192] —van02 Debt serves RAISER —a Enat ond Southern Nica Bal “a aa ess al i. North ia 30)_—_sal se] ae 7a| a9] au] soe] 13:7 esr Aca ‘22, t0) ail tara] tana] 1040 tesa] 16 35[ ul 23) 2296] 944] — 21 98) 1735] 17. Simple anthmelic mean Source: Alomaychu (2000). et transfer = Loan disbursements less amortization and interest payment [as defined in World Debt Tables (see Tables 1.4 10 16 in Appendic lor details} Aggregate net transfer = Aggregate not resource flows (Loan disbursements less amortization) plus officlal grants (non- (echnical) and foreign direct lovestment (FDI) lass Interest payment and FDI profit fas defined in World Debs Tables {600 Tablos 1.4 f0 1.8 in Appendix for dotals) Changes in the structure of African debt can also be described in terms of creditor patterns. From Table 1, it can be seen that bilateral debt comprises the largest component of Africa's total debt. This is followed by multilateral debt, with private inflows showing a decline, Generally, it may be observed that a larger share of official debt Is now disbursed on concessional terms. Finally, it is interesting to note thet the debt problem ie boing aggravated by capitalization of interest and principal arrears, which constitute nearly a quarter of the external debt burden, Although the share of African debt a5 a proportion of the total debt of developing countries is low, the relative debt burden bors by African nations romaine high. As can be seen from Table 2, the debt to GNP and debt service ratios rose from 20 per cent and § eT per cent, respectively, in 1971, Feaching a high of 110 per cent and 25 per cent during the late 1980s. In 1997, the last year for which we have data, those ratios stood at 100 per cent and 17 per Africa's, burden of debt may also be assessed by examining transfers to the sub-regions. Thus, it we exclude from Table 2, grants and net foreign cirect investment inflows, it can be seen that net transfers since have, in fact, flowed from Africa tothe developed nations. Further, it is noteworthy that the level of increased, from US$ 1.7 billion in 1985 to nearly US$ 7 tillion in 1997 (the latest figure available). Finally, it is worth pointing out that nearly 35 per cent of grants to Africa, in fact goes to technical experts’ cent, respectively. such transfers has coming from the North. ret 1985 In summary, the last three dec: ades have witnessed an unprece- dented increase in the level of Afiican debt. This debt Is charac- terized by its predominant long- term character, the growing im- portance of debt owed to bilateral and multilateral creditors, a trend away from concessionality to Ron-concessionality and an in- crease in the importance of inter- est and principal arrears (usually capitalized through the Paris and London clubs) as a component of long-term debt. Indicators of the debt burden also show that Afri- can dobt is extremely heavy com- pared to the capacity of the Afri can economies, and, in particular, their export sectors. Moreover, most African nations have been Subjected to net financial out- flows in the period since the mid 1980s. The performance of these economies, coupled with a mounting debt burden, surely in- dicates that African countries are incapable of simultancously servicing their debt and attaining a reasonable level of economicEconomic Foe! .d Hex Impact on the Ethloplan Economy ‘Bay Abe Zin growth, let alone addressing Is- the ‘import compression problem’, Naturally, a reduction in levels of sues of poverty alleviation. It is in which a shortage of foreign ex- public investment will tend to have not hard to imagine form the change adversely afiects levels of negative consequences for physical above figures how difficut it Isto public and. private sector Invest- and social Infrastructure. To sum survive in the globel financial ments. The import compression up, the debt issue is a crucial clc- system. ts one of the major ment of the overall economic crisis, ues facing Afriea facing Africa. How, then, has this The actual size of indebtedness today. Second, the accumulation of crisis come about? How do Africans does not usually represent an eco- a debt stock results in a ‘debt over- could optimize their gain for global- nomic problem in itself, since this hang’ problem, which tends to ization (if there is any) having such debt may usually be mitigated by undermine the confidence of private bad shape as initial condition? And rescheduling and similar short-term investors, both foreign and domes- what is its solution is a crucial issue arrangements. However, the size of tic. A decline in levels of private for African policy makers. accumulated debt, relative to ca- investment as a share of GDP in the pacity level, and’ subsequent im- continent, from the Iate 1970s on- pacts on the economy, does repre- wi ay partly be attributed to Ret sont 2 serious problem for African tl or. Finally, servicing of debt untries. In this respect, three is placing an enormous fiscal pres- Alemayehu Geda (2000). Finance interrelated implications of the debt sure on many African count and Trade in Africa: Modeling problem deserve mention. First, Such pressure has had an adverse Macroeconomic Response in servicing of the external debt erodes effect on public investment. This the World Economy Context foreign exchange reserves, which finding is reffected in a reductio& in (Fortncoming London: Mac- might otherwise be avallable for the share of public investment in milan), @ purchase of Imports. This has led to GOP from late 1870s onwards. ‘Natural, these aggregated fgures show only an ‘average’ scenario, for African nations In gene‘. However, there are significant exceptons ‘a the picture pained by these shatisies: Specifcaly, Burindl and Guinea-Bissau, inthe WCA region, had a debt sarice ratio of 40 per cant and 94 per cent, respectively, by 1992, whle, Uganda and Madagascar in the ESA region had ratlos ranging ffom 40 to79 per cent and 50 460 per cent, respectively, fiom the mid 19806. in relatcn te debt to GNP, Mazambique recorded a ratio ranging from S00 toS80 per cent from the md 19808 to ealy 1990s, while Guinea-Bissau had a debt to GNP rato of between 130 and 300 per cent fram 1960-1090, Filly the dob! to GNP ratio for Congo and Cote d'ivoire ettod at close to 200% during the mic 1980s (Seures: Wedd Bank, World Dabt Tables, slacranc, 1994), RRR R EERE EEE REE RH EH ANNOUNCEMENT aN ee Cea eR Mela eae atm am] CACC a UUM maim are Cole au kaa Ni ae Cee Mtoe a ae ee OU ALE Sema e csc} INCLUDE, DR. BEYENE PETROS OF THE COUNCIL OF ALTERNATIVE FORCES FOR PEACE AND DEMOCRACY IN ETHIOPIA; ATO MERRARA GUDINA, OF THE OROMO NATIONAL CONGRESS; ATO YISHAK KIFLE, OF ETHIOPIAN DEMOCRATIC PARTY; tae ALU gna ter AURORA M ae AUT aaa AND REPRESENTATIVE OF ETHIOPIAN DEMOCRATIC UNITY. PARTY. See eee ea eae OTHER TOPICS OF IMPORTANCE, SUBSCRIBE TO ECONOMIC FOCUS. Vol. 3.No. 1 / Feb-Mar 2000 Bury rnesrcnieeeicdEconomic Foc: Se aay AbTEnD PREDICAMENTS OF INTEGRATION IN THE HORN OF AFRICA This paper is based on the presentation given at the Round Table Discussion on Regional Econemie Integration, organized by the Ethlopian Economic Association and sponsored by Frederick Ebert Foundation; held st Imperial Hotat ‘on June 18, 1999, . By no means, the concapt and Practice of regional Integration are ew in International relations. No country ls self-sufficient In everything. States group together at various levels to deal cooperatively with the political, economic, social and security problems. In most cases, geographical proximity typifies the regional organization of states. ASEAN, OAS, OAU, ECOWAS, EU, COMESA, IGAD, Worth American Free Trade Ares, SADC are the geographically proximate regional groupings of states, There are however situations where community of Interests becomes 2 driving force for states to get organized. The Commonwealth of Nations and the Non-Aligned Movement are two ‘exampies of the latter category, For regional groupings to survive, attain thelr objectives and to eventually develop into regions! Integration, there must be an amenable ' political environment within and between the states 20 desiring to get into regional Integration, Hence, the challenges and opportunities of regional Integration in the Hom of africa will have to be viewed within this context. The Horn of Africa enjoys « grest historical significance and it possesses an immensely important strategic zone flaned by the great Nilo River, the Red Sea and the Indien Ocean, However, the subregion has been lncumbered vith “equally Immense political conflicts and socio-economic challenges. 1. THE CONCEPTUAL ISSUE ‘The Hom of Affica has been faced with the problem of definition wile the geographic", "poitical”™ “gecpoltcal” and “strategic” designations have unsettled what the Hom of Afton actully le, The “geogrephie" Horn is described ae compelaing Somalia, Diibout! and Ethiopia-Eritrea. The "political" Horn in concsived aa inclusive of the counties forming a. poltical landecape with shared crises and agreed commitments to collaborate towards averting and mitigating the crises. sotuar subregion as a continuum of the apace batwoen the Nile and the Red ‘Sea/indian Ocean. This particular conception Is like a reminiscent of Mohammed Ali Pasha's “mare ‘nostrum” or King Farouk’s “unity of the Nile”. The strategic concept ot the Hom has recently been advanced by the United States agencies aspiring to create "the Greater Horn of Arica to Include the “geographic Hom, the “poltical™ Hor and the "Great Lakes regional" states of Burundi, Rwanda and ‘Tanzania. Se ‘ak wally te “witina ‘Hem concept has been trinsiated into an Associate Professor at the Department of Political Science and Int'l Relation, A.A. U. | organizational shape in 1086, ‘culminating in the formation of the Inter-Governmental Authority on Drought and Development (iGADD, subsequently renamed as Intergovernmental for Development4GAD). Mare than any thing, the establishment of IGAD was ‘prompted by the 1984-86 drought and its disastrous offec, and Djibouti, Ethiopia, Kenya, Somalia, Sudan and Uganda are the founders of IGADD. Eritrea joined the organization upen is secession from Ethiopia in eariy 1990's. it was not dificut for the founding leaders to realize that one state alone cannet mitigate the fooming calamitics of the drought and the deep rooted economic probleme faced by their respective nations. There was also an addtional vision of the founders to use IGADD a8 2 forum for Conflict Mediation in the sub-region. In this regard, IGADD achieved to bring Ethiopia and Somalia to a negotating table. In May of 1963 the two countries signed an agreement which helped ‘normalization of relations” after the 1977-78 war. There was a polities! willpower and enthusiasm on the part of the leaders of member states {0 help one another and to work together not only to overcome the immediate problems but also to dea! on Issues of sustainable develepment 2. AMBITIOUS TASKS Having set up its headquarters in Djibouti, and having structured its organs, IGAD set oat for an “untitieus programme ands flan or action which placed priorityEconomic Focas ay hTEnD Economic Issues/Iuformation ‘emergency drought relief measures, @) drought recovery efforts, anc (3) short-term and long-term socio- economic development of the subregion. Projects designated for immediate action included the tollowing: on security: embark on research into droughtolerant and high-yielaing crops. On__environmental__ protection control pollution and provide environmental education at mace level to protect againet environmental degradation, On transboundary diseases: produce vaccines, control human and animal epidemic diseases. On _Integrsted water resources management: promote and improve the management of the transboundary rivers within the IGAD subregion. 3. DEPENDENCE ON EXTERNAL FUNDING ‘The organization has a supreme ‘organ consisting of heads of state and government; it has a council of fers, a secretariat and an executive secretary. All programmes are approved by the ‘council of ministers, and executed by the secretariat. Amidst the economic problems in all IGAD countries, the member states have ‘not been in a position to financially maintain the organization's personnel. It has always been Experience in Bolivia proved to be sucressfulin «ural eectrfieation under auch arrangements END-USE EFFICIENCY End-use efficiency problem to 2 400 MW system now operated may not be as important as what may be the case under a large system. However, the level of saving from efficiency in any power industry largely appears to be cost-effective and, therefore, has to be pursued with the necessary institutional backups. The future demands In- tegrated effort in this direction ranging from institutional sup. ports, efficiency codes, tariff re- form to utility driven promotional programs. Persistent tariff princi. ple as outlined above should be able to work out the remaining part of end-uee efficiency by putting up sufficient commercial pressure up fon business operators and large section of the customers, customers often used to france such schemes with additional gevemment allocation. Finally, for a concluding note, in ‘an attempt to indicate what ‘the future holds to the industry, one writer puts it: “The ides that electricity s the epitome of local business plant bull in ono country or ragion, fo serve customers living and working In that country, pald In local currency and regulated by the local politcal structure is outdated. As 4 result of giobal competition, cus- fomer demand and competition for ceplal, regulators primary function fs to onsure that power Is made avaliable Inthe mest stfective manner pessiblo ‘This may seem to be a little bit exaggerated pethaps in terms of timing but nevertheless is a fair Indication of the future to warrant attention for what could be a long- term achievement depending on the particular circumstances. i Payments of Infraction form utes & “ UNDA)World BanWESMAP: June 1996, Power sector reforms efficiency inpvovement in sub-Saharan Aftica,p.179. Ss J COUN —Ec Ady APTN Economic Issues/Information CCA by Peed ba a Laman WM cht POT AwGG EEL AG PEN ht NAAR AS eer DIROD RAE Pe TI EE WIA Sood ALN a kh Tag LG Coats NCR AR NACI PX het hake meas tam Akh AI det dE PUNdde LOOY ALT MD OS WASHOE wet Pac Levw'y i Pac ALCAN TI ARE hae LPaTA: Nak Peat EM Wis oom Fae Kew W MR? LOBE, ned Eam Nase MAGEE mew? Mabe dd PI FIC WITT LIDS PPE hee ERMA: FIC TD Median POMS AL mick pew? Mae OLE hee WtG Pike FINAN MURR Nth FOL Kean ane Puce tS AF LIKE PPO PAhEi® Rown te 290 BR th OSA ARO DTPA WE TARA Vik? Poel ad BUPA L Te PUY Rito ANT HET 7a FAG AIA Naver DametE Loon ML 2G dl HAR MLE Pate Pade hoorrmh Ars aia “TI LAS) WE PE PE PUL TAC UIFE comer VILLI PETA WM TAC FANE ULE MARPRLE LN ONE Mk THC ANELATS APINC RIAD? heat? 1 Ie 26 TF SFO? TF 9F 890 UME PARA oome® (Tax base)! AG Trem PSL MM PAC ( progressive income tax) 8E PRR BLAM (oudget deficit) MINE Newardt” PA 980 we Lormyry PAPISIS $F FUL THC LAN LA IV IRD P80%o FF TM IC AIAN MTR AP teowc® Ind ads ANTE FR 2 “RTE 3 aah Prot BOLLE PMP WEEE ATPENT be F Phided- SUAE!” VARS AE FA TIL KIRTC FO ALLY bor: 2. #77 Mi. PC (Direct income taxes) PANE LRP AAPPRS 21 Phe LCF Coa DAPORL REIGN RILEY Pa THe PLANE IS LEE SDETIES Kook Iawern foes 31 7 Pood tan AAPRS cot Mh Gute Bank of Ethiopic) hitter 04a A&A Thea 19 Koo aA PML TG APE VC 107/1041 PMER oo Rowe: PIP Ni INC LIA income Tax Decres) #FE 181989 #7%A: nowanciy? NTFF OF Ue 7G AATANGA MLA OAPI RTC WISI bh: Mw APE cowed era 7 Anne Cah BIRO 4ES® Abie PALE DingrF nas 7c PANT Ia wim Meek Ine PILATE I wind a’ AF IaH WN OPAL TEMS LBM wiadie 0 peat Nhene welt ioe PRAM? PLE 1h PAE ALE PIL Paee™ PLansm Prads Ie (Specific Tax) 86 APanonc MULE PAC aN Progressive tax vate) bam PUL Te wid Of 35 FURCA CM KATE Crcome Brackets) FF AVI AC 30 RF hie MF NIMC 1% toe: KIAVI? wR 20 PLLC PM ACHTE ALT MULE Phone TAC PUNLARE a7 Fan [23 Fac PURLATP | MPae. PCL Ae Tm PAG Fae ane [430 0ae 3h 40 O75. 40 WA hoy 50 1.50. nos0_ 700. 60.00 ‘nZ00- 750. 6 PAP aR 14 PRRCHP PIR TAC AELTE WI0R Aah 218 PHAPR ABT PH) PMTs LLA wn Aas TAC PCAN Mat PLhkAa rere 1a Tae (Pret Taxs) reot® mm rac\| mm Ane ‘TAC hawk. (Personal income Tax) AF FF7& FNC (Business Income | |hy50 ME AOR_BOO op Ta) NA 01k 2aC APH wc 60 11996 4.9°| usoo * > B50 705 honh2s? 1 BP pb AL Ph: LF RIK Pav APE FUE Nork EW sac PhEees| 7 7 ? ik ae ikhan Photte. IPE Aen Tang) [HEE S000 #00 (East African Currency) AF PAY Tt Harare LAE A CARER Fie BAPE omd wet AT ane? ott Onan Ana aiicRe eAReLM PPUCT NEA UATE Ged PRUE REP PE Fe:Economic Focus Ady ABTLhA Economic Issues/Information rakes? TUL TMG ANE LALA Nieanh 17 PIG AMPARC AF he hace Phaees| 29AR PNG O51 NE PAC 700 mh PiFo. Pase| APF ATS GL5P PIL INE AC 60.00 RIRNGA PRPC? II FH @? Pr. Te ebecr PtAse| MM S9FarF PEALE PC RONEN Far PLA} ocy Werical Equity Criterion) 2a7¢na tac: "aes" ATPL Mtr KELT Nb Nery Nihe- PENA TAG eth? FAFA: AMTE TA Sa PAG 651 ReaNt® 0.928 hile ArIC AeA PRIA UL Pham PAC 700 ae REUSE TS md B.57E emhand LAL Whe £P°%ckar Prone PAC Specific Tax) FI INC PIPE Regressive Tas) We KIRA torr AtaNe PML ACHE ooanr Mart ALND ANPAEE ANFLE KISHI wie Fan 22809 PI FNC APE HTC ISHIOTI HPF 1, TAC ANTNLA Fotos APE AVIA PrOR AUF SRN Par AHL NF BREE MOBSE PENA Rew Th The winch V' ws 1 PLLA PT MNTFS IUD PEED Sha: NINE I Pde POC Uh Aik 30 wf AC 50 KE RIAA _ALCIA ML Pimbha PPh Pas WEEE OSS Pret Fa? fooned gnIr PMT We: AP, Pemarciin® PPh) PMS AIOE NAGE 3,750 018 foc Mh Sham ban?ld Puc 100 Me Me Atk PLLC NC 15 AF At Citar We 8S AIA TAC NGA fe: fu? AIK 20 FRE AA Phid@? PIL 2IG Pit Fe Chads Me WEE WPALR MCIEE AAPCLA (etiminating the regressivity ofthe earlier rate iructare 23. Ld LET Pm Tac APE RTE OT IIT NTSFOr TNE AOA Pato) THIS APE aia Pak Aw) Maes wr Rebbe LEA PERI Am Nmdir "PPA Whee watt ata PUANAOS Pd ML PN dw? PPC PS AEE ALA S82 (Progressive Tax Rate) bar: LU PML ANEES PPM) PUPED VC NIG OL 5 WH AIAG AM FAC AMESLC PATHS) AWE RIAU ARCIA: BPAVIO NTC 8 10a? 7 WAC 50 wk AG 120 WE AIAA ADFLA PING PEPE NiOLsOL PRIAE dws BU? Nicholas Kaldar 23L Same ASaimc M950 Economic Policy MA Bde PPR2 UIC POTH Th TAC PM NERF MEL NATE ovaAy PANPT? stm amo PIF MELE 2 LUV TA 3. P71 ANGEA MMW bd 28 EIR TE am CINE ikea An wate Leman Wh 2NC AF LRmASD: MABE 296 I7R1953 WISE OT? 1 TAC AB DATNLA Whe PC UF 0A ta Here 48) IIR 68 hkow TM Ak PLAS TNC PMC Ned PE NUDGE Loos FW IG WEREATP we! ouane RFC hh SO FF EN AmIC OAT “TL nan mae AAG oonMr Aan: eIcO Pian? Ts $7) OAM OAT Me one AAT WRC Ré-th Phd CF TALI LUE CEA ALPE Whale ah FOO te TE 44(A) hike 40 Gow? Mk Nana VT AL PTH CWPLES AMBRE PIR VSIPE hha PPTFO-} 1 Mhorirann AN OU Ld: hie Ub RVC PTA UC MEE AUPE APF PoctBED PLeay NM. Lb TUS Fared E PI) PAM NEL ova ovh eard EME LFA: CH Meth Avda nork Aik hinek sore PoeFM! OEE QUI PuceDEE Mh AKL MACIP PAP PU PPM kanes (hinovation) Sar THI? Le NE MOL SORE Mar PIL Fon WA APL PA hk HOPE argh PtTe APF PRO NER SeDKIA:: LAF RIE 10a APOE hth 12 wie AP W1956-1990 BI" Mar Uk MER PLPRE COREE ae th 70 ak U9 APALS? ARMY cvAPE ew PmsTh #2 oct EE ath h 49404 ak 318899 RPE ba aT BPA. Pando BTC MEP WAH comm: ARN hows AS (command economy) . mcd APEPARE ATC APMP? PIC ALOMP: FVII Pudt Fan hear of At wae MTC PonP@ APT NR writ MoU UF FIC TE PLT hawk, (mixed economy) CAE ONT hone Of A OP! Of TAR Le diese RCERFE ait PVG Woore ARPA WEFT be, ihe ome? Potel Fam 2G. INE! LH! OW ADEA WERE Ped Pe PEPE LMLL: MOK AVTMEL OTR MPL AB Fh PRoead Me TNC AibeA LI OAK abt or HELE Pie TA NIDDID AooF nhonsrn gy? WE Nth ak Uh RCALPF! pa AP AMLLOPE att Aree to memeeh wre PRE thor A RPEY Mindad wr? Por LINE NRA PP REA NILE DBPLEDTA DAPK cod ¢ear THE $I thea (Tax Withholding) Paw atime Alek MOET AME AIC PPTL Pam WRF ADA KISKOE FOFAO! OMY PAC ORLEANS PLSMT LBED DL P50 U2 RON? He me PHP Pm PAG ARI wanda LECATAS Aw ae TEAL PXIC BAT WL MATE mir mahee MEK RD Akar PA REA bio PUNE PUL Tie hele PAA ALLAT”: LOB NIK Mt OPP OATEFI NED PBPERE FOF IAT COE UAT BAP TA MOAT ct 1 1056 9.7. ITT NwetT Reed mM TIC Five 1978 how? mae Me 304 LARD Aw? FIC 74 M1080 Fw ANY Note Reet, Tic AF Fie WM, AC 335.58 LAD Jon KAN ier 997 kan IE INE teers aM, TIC naeA Wee mwa Fa 2 AAreE M960! 17a AE_nt9B9 9.9. hea a, TAG AC 77.4 “LAPT 756 LAP? act 1739 “LARS NE (HADT TIMID WIE EY wT E) “ML ETE IC Ts Lu vtee 10 aC WARKEABEE NAAM ALS Pbhme PNIE Bie WL MAMA elle Atmtat Amer tReows te TE ME aC DQRBL44) fle azeTase MFG 9.952093 1Ray ADE ena 2 PY keh PTES TEED NIRAAE@ hes LFF TUN ALP PEON WL TACT Mel E ra. TAF ar eC? We PAE AMAAS CLD ANPRL PAA wh TP LU Qn6! MNAZPE thd 0O0S huakPE Loonr APL Newtsh (Tax withholding) Aa"Lhka tar PLAS POOH Th TG AveL LWP PRET A 4 PG PF APTNAFO CLT R70 YORF (Basie concepts) BL FTG owe? (Tax Base) AT Tom PIL PAC conde 9 ebb CNC mate Charts bd she PLAS TAC POLED Sars: Ler PIL PAC amet PUL LEIP time dimension) Pont AUR LEAS PoIMh watEs Phovon mM WG wode AmTHIA WIRE APR oo59?| PML tort NR (OPS Me) shear? tend PhnaeaIs 12° Thad Cte tard NIROP Debra tor Pembod tan mn Lakers ir mondih— pera oi PE APTA Bove LAF ad Phar VLA VI AFP9 efter KILLS OG PF LUA RILTNEDP ut WRPINE Pec ORY RAE ound AR Patines Weert vat hoot Fa Mm ¢-aanne Tne MARE bet Bbatan webie dod Donte Bd) 99 Neve For Anse euAD LAG PUTO USS OPMAAE A AL AFTRL PP THho PookE Ml We mud? fat koa UR? jar 78 WaNé Mm THIA POMP AIC ONT 1 UPLATE ooh MEP FPF cower PAPBAISS POOPIE wdtT PL ORS rhea em? FLAG Rho (Taek) aPcar LMA" PHIPEPS FAADATD me PLANO Poet I Ie broken neh 20 hac fhe” Nee PLAT Pee Th FAC MINS NE NF Sier Rowan away ohbed LAIVAIA! Li MILT WI TREE ETE PRS Adare 4.2. 28% te PH (Progressive Income Tax) PME ODD MALL PLE NTE AINE Atma PPALE ATATEE KIL wlan? Delence)* PPCM (Veucation) § APA: "NAC (Police Service) Olt, LPN PPI NRE bart TAC BAT ee PF CPM WCFEEF (OCU FY) RIRLLA Lara Aner atta man? era Tue? iE ae APPAmk Hee mbt (Eficency Criterion) Are? PME WER PLNCAMS Dd! Ihave SIND 92 92 Kron WAT AG PLANNED) £70. Tac ce RIVE IAT Equity Caterion) F Fax GAO? PLOTARG TTI mieetr oy mate | sah PIA CREE cer ELA er ANA AaheY RL TM IAC whe wetto fac feat (0s) L7TAN Atle betior rttment? +2 ATeT hat a Te? Aa “7a 2odan ries Akt an 7acr Atmait quero tac £wed we tare (rage) eranan a aevrcna| WAPISIR TC hh mid) FIL TNE PCR EVEL LO AWA BhkAAY Aha Me SAF? 7G Wk AeA TPR (Aforizontal Equity) AP PLACE 10 P4Fa? PAG WPF RIL Fan ARH bie OR Wertical Equi) AELEA DSH PFRL IA PAC Progrenive income tax) PEAPE Th PAF? Pa hePE APIS F TR the PGK IC aT THEE Phar ATF WEEE M Pham NEE PI, TH LIP WEEE Th Sher UREF PIL TH PNA KILLIN LIRA 1A NOE AID eahE Uke WET ATE Mink mmc herzier POH Ghor PIA FAC ALT LLANE IL PAC VT #7e 1071987 ntmthar “Inch V' Penh PAC PMsar FRA fore 15 PEALR PIM ACHEF (iscome Brackets) AF RAD P°UPE (Tax Rates) tmanh mir UIs PPO? RID vIn AVH @URT PEEP FNRI" 4.3, WER ABN (Budget Deficit) 1B PIT wm eI PULL AUF Tharg ator Med ht phoetims AH (palanced Budzet) ne howa Bar mis Foe AEP Budges Suplus) O29" ata hia NA eaEP RAP Gudget Defies) Mra LPO FAY Mh AIA FT APHEYE Wace (acalion) PRSANANOR AUP wie LTP ALAR TETAME CULO DIT hem Pade ehBE PLC Levey BATCH: | NAVs Whois MAL PONCR hee Wwe wart Loot hea POF) aa WE NRL hho (rtwita) i, & ePnE® akak ranean In oak PIETY at NO Ia? foto cmd NW AIR SREIN wear WThor hab 1Ae Mee oondh PIED 2A PONPAAS 104 KIA KBR wet PAwLIPT howd thane AIA Re Rome heeo BiaaAs hil VSS IC NLELN RETO ANFLNT Jenie Howtiome, ‘Theory and Practice of Money’ Mtnnor emus Public France WtaTan Wa ake eae hth Rowe APE RBRUPINAE TARA [4 fos increases toll parcharing power’) ANC 980 wf LomUty PALTEIA #3 POA UL? PUM PHO adh OPES PAG FHL PLEA whit | uv womdir Anrurh Ab towc® Te Ady AAPL PR Q ATC 5 wR AL aA PTT bert Pik IN Ah Ae? Awe cam ROEPOR FHWA NATE? AMAIA NORE Mk Aman tare seid. Ie PPER TR tik cowed Yi NIBP PANE AFL0D LOTMA OF! Rt NBR! NE ase! AF NeOF 5OF ATA 10 99h metro ranenh Lmat POET ree TACT avd NIAUT" EPMGarD PUL hea MCHC WIRE whew [1] meh BFA:AN APTA i Issues/Informatior wemEeM fl) 7a Fae nin | peeneanh| rac | pos e peony | mn rotate | ierin mach (82) rene | tata wh (Exemption) cc ee) Ne DPA PresT Pbk Bee me [a z Hae Eran = a oo_| ea [oo | Par | 36. a4 2 ‘oo_[ or [0 [oo | aor a2 ee I of or ‘oo—| of ||| 9 |p ‘os o0 70, oo 20_| w|i o | 5a [40 a 0. 35 | ok a se 8 oe 12 [48 oz 7 og“ 60 [7 Ta 10-60. 9 0 ows [io | a7 [9 wus 87 se 99 25 0. awe | as [10 ae Baar eo) ‘oz 0. ‘or wor so [no 20s | 37 | 108 #2 ‘oz 20 | 00 o7_| 10x [20 | 67 | 12 or 309 | 98 OnE 3-20 | 00 aa_| wx [ 29 | a9 as ar 2 [08 Eee os | 20-|-00 as —108 15 | 68 a0 | 16 BYP 2 120-| 00. Z| 108. 16 [991 S| 25 isk es so | on [oss 0¥ i8_[-90 305 | 95 EPS ox 0 [on as | 108 10 | a0 39 Das) 16k #5 7 0 22] 108 zo [ar ser [a [a ey Bo 00. 3D. 10k 22 | 26 | 480 | 61 ise er | ase | O6 0 ‘o6_| 10 2s | | sir [78 Ee? [azo | oe 7 ‘qo —wwz 48 | 00 eo —nez | ‘s | scl aoe ae pe on ae oe ae | 32 | B00 aa ink [$8 | co a || | oo [ T 56 | oo | 26 | 12 | a2 | ae | ao [20 Bee | eae Or | azo | 0080 | ao | az 48- | 00 aa| or | we | | op coo | ar | ae ae ae | or 7g] 26 | 20 | aaa | ao | aa [38 | a0 | MS. asé_| 17 | a7 | - as | er | ae | mes | oe | oes |e Z| ao | oe ao TE48 | 00 iL use| 22 | 7 1 Fe 7 (eae [za Dae azo [00 | aaa || “raza | 00 L 184 08. a | 27 | or 4 _ T 75 | 6h 51 _| 36 | toa | 97 | 677 | aaprD | Bis FE | ao | aso | oo | ae] 48 | oo zie (75 —15¢| 92 | or — so | ae | or Da ae | poe a aT [ao as ea oe aso [os | ae] at | oo | | aio | az [ sr] ae | ~ ae ie | ae EE aa [on ao | oo 480 | 00 | or | 48 | zsz [oo | ise | a | oo Tao | 756 a 2aeea__ oie [36 | 0 [90 seo [oo | ra] 8 | ~ ws_[ 00 | 15e | 7 c of Tao, ral a a 7 93 1et | 2 | 100 BE or a woes [pao 00 | ia0 | 00 980. Tae _| 46 280 iat |_e 108 Ta 90 | wae aoEcouomic Focus aay ADSL ee eS PerPoLeni war bo» koak Wine 120 NIE Aman bmi AC 8428 hudt hm wet ano ATS Me TNE RENRAIPP re ® MAATI | WICROK Me MALSIE AL Doe» FPS Mam es mone 261) hectGar tthe RET AC | 16835 Pe TC Penh hw hadm RI Icha 62721 ARC NOE! Tot Bam $7 Fanaa?) Mss TE I wO MAA (168.9915) ~ AC PRCA Me TNE ATID POF OM PF Pi TIE | 24.50 WAI ONE MPA omit Ae Ala Lyear 7am 22 Me Tae APH GFF) G5AUIIIA3) hard? aaerAnt mie AF POR PEND Fac! Ame Ke tre Fie\eamee PIKE Read Roe Me 1928 Wha Mik WI Ah LOCA: BE am 4 22. 2AC\ hoc Far oh Motil MAMA £10 #7 THA DL TED wl PUR Tne! deme Fo] gmat M2 F267 wh hd WE ar ton PE 2b TIC NA LITA POF PF PG TAC) Ad BIMAY OUTS wade PAPO? PEASE At BAF wick PUbeAam “TAC [t0877.%\ 19 9 been Lovwy PRE Mm WGK (15.14.1087) + (7AT814)) = IE 9.80 AthIZL| mop poop BFMA! POP PEP wet Tor Avene Th tiKle PHD PY PME WIC POT I UAAT) mia? ne B02 handsh ONMAMS mich AG PERO etm (2) | Peay THA fatwonto | gown r10 | 7c adh (33) *) town #e59% | eee. TF +? Ps | TG teva | nea Lown AP PANEL povay iat a¢3 | os | as | of | 0] 00 | 2] a | 2 a | 02 | 7 nos: ae | 08 | or | rox) 9 | so | 2 | a2 | ae | ze | Sa | 20 h26-30: 5¢3| 163 | 35 | 15% | 24 | 50 6 2 oY os | 19 | 29 326 | 70 3430 | as [06 [471 35 [970 | 38 PEPETT PEALE 20 09D wed an Pech TEL Wither what MPa RIP “Ime [3] aeea £20 | 7a mer (si) | regs | phme 20 Poca Fan 73 n6e | Pas! aac Mee |" heda OF tHbe 257 koa, W3sa' 367 | 98 | Of | of | 4 | 38] 3 | 92 | 88 | 7 nozsirer | 333 | os | rox | 33 | g6 | is | 54 | 47 | 40 | zor! 25 zie | 75 | ig | j so | s | 67 | 47 | as | ws | 37 C 633_|_ 0 I [ozo | 20 [1a |e es | 556 | 48 PLU PHATE ANGIIT 10) ALAC HIRED ANEEPPAY 90 TE Rem wd teal PU ta Rous Peheman PEST AALIE| ONE KCI (30 8) bere APC ACI womatt [2] AKarc 208 ACK P thine Lome suvce moan PP Levant Pont (362648 OEY wIMaH [3] Moa LYTA emp JO ¢F\ AC T9380 FU? RUF FIs PAC 080 wie woh PC AeF Rew Wh AIR wach [)]|\Reaury re FUEL Mhh wer We 8380 DALE? EME Ab PAPO thtA PCC wd? MCV a Awdts nto ie 42 AP MIt XIE AR bieoCd RAAF NPMFos| PAPA — MANY PRmey Ih PIE LOD dae OFF wetFo LIC Feat Patra Yin tevin |MLAEKY wP> wud WEI (Tox Base) NEM AUF ALFAI* HL AOVFa PLIN Awes| ta? KIS ANLAL bart AIRUS? PAST TA UPPFOF 10 43 PAC 980 Loman wert howe) Fs HI Ya RILVIT MPM er Th ACNF AE UPC ME 268.60 FENG TEL hat Ta Peaa|AILLINT APE THA LTE WMDTT on 47 mode Reith 14¥en #7 Kova Pr wiber NING 1X Wer Fae PP MOS PTO PAS ar OF Kean TL WC MALS ta Ae $98 Rewer whew (1) be she CORED CA oT En6. Fane thea ik Inc tit ta Aven mA, Aemche wnat Tar 3087 AIAG TOME LMP Mute M88Sk hho AAA Fu OF do went P3F MT WM Pm IES Me RE hed MME Ma Mere PbeoNTDs APL OL Indi momany PPRLOF wet var Leent? IPHhA moHUr) AeTid FA (Comecting entry) eomvaetss 6U? TA ALY WAPR “HOE S080 PAPPAL LEAL woFTP PREGA ANPRLC AGE N98 206 Whe #TC J2 Fae Peal CO AC NAEP Boek wir PLLA Economic Issues/Information mk tno Fax Paw toni. atoont tin teal Shh. PLT? AA hh BRE PERG wt BOLI FILS HRP thd It AR? God Me TL LF momnT ANI PLA WT Me crn TF ane mae eto Lik wittha LWFEA: NowacIP? AR teas? Pa PCE NAR Md Th INC nee kod MTC come KILL PIKE PRA MLD DDE RAELEPS BEE OEPRE MALPLM MneesPE WHET KIRYT™ Nets OF” Aer eane PM _wcBPF (References): "and Oldman (1967). Reading on Texation in Developing Countries Baltimore: The Jhons Hopkins Press, Boadway and Wildasin (1904), Public Sector Economics. Queen's University Kingston, Ontario, Indiana University Bloomington, Indiana: Little, Brown & Company, Boston, Toronto. Eshetu Chole (1987) ‘Income Taxation Comparison’, Ethiopian Journal of Development Research, 9 (1). imperial Ethiopian Government (1865), Ministry of Finance No. U'2243/8/2, Model 36. Jenie Howthome (1963), Theory and Practice of Money. London: Heinemann, Ministry of Finance, Annual Budgetary Revenue and Expenditure Accounts, Various Years, Takele Tadesse and Dejene Aredo (1994) ‘Glossary of Economic Terms’, Ethioptan Journal of Economics, 3(2), ‘Teshome Mulat (1987) ‘Some Properties of the Ethiopian Personal Income Tax, Ethiopian Journal of Development Research, 51), SAA ho (1900) Poet Lomort aN TNE YAN AE hues AANTLO AL rao TARE ATS ADF LH 1) 2 Ant IPL ae 9 Herc 2G 3 Me arent oc FRNIK # OL ah ae 4 ere 4 Oy OC PUNIE x 1986 9.7 ATH “Lic aA ITED SMAORE NAT 1901 1.7" Ne REA MILA ACTLA DLT PUTA TYR Yb Maan agnor LOI wer EET OLEF AVEALC HUN 25F Soe 19541079 Juan 1070 9.9 KA H PERG MILA ACILA MLD Fwm VLA dPiEhh 1990 AKA Soe MULE WO 4°, + adh NM 20% Gort wre 19, 1959 9.9". ae MUM BF Gor% src 3, 1971 49°, 7 12 DWM SAY Gor deve 8, 1987 9.9", # PLLA YE DWM BY Io? Here 14, 1980 4.7. enueEconomic Focus Agr ADToEAN Economic Issues/Information UOTABLE QUOTES [Sec emer Cota oi ea Cuter ronence meni cares evs CMe te eam cotta eaten Lord) Macaulay, “Essay on Mitford’s History of Greece”, 1824. Social prosperity means man happy, the Cee m or ears Victor Hugo, Les Miserables, 1862. Piteremcctcin cans OUR E COR RECA a Pon Uenetrs iecmi ts William Mortis, Art Under Plutucracy, [een Oro eR rece leo ae TB rt ico RACs eer aria te aT Birmingham, England, Nov 13, 1896. Pore mcs frre Merce ACO n itn ees Calvin Coolidge, speech, June 11, 1928. iit rn promises they would be able to spend the Cite oka cee Waa aT tas As the Crow Flies”, Crisis, Jan, 1931. Peek nennscna in aes hunter Corea rites: RC Ree eT ROR el cai | things of life and rising standards of teas G Reena cet . Oct 24, 1934. EM ue eee ean cis Cra Ca Ne earn rae ra Teenie nent EMC Camo este seat CL Joseph Schumpeter, Cupitalism, Socialism| land democracy, 1942. BUTS eer eM ga (Constituent Parts of Marxism, 1913. (eRe eR cence in [Ce SCR SR TT oS And recovery is when Jimmy Carter loses| it Ronald Reagan, his recollection of a 1980 campaign remark, Oct 2, 1986. (react e nny Pacitecn ese cata Tecra lon the job is equivalent to maximum Meo oes uiecarisen tats eat Wann nr tr anetcas Dixy Lee Ray, speech to Scientists and Dianeseei asta utr al ee Pteinthenin eee niet Motieech once estas ae eee mes atawOr Leutnrt ag and out of a job are the stuff of which, dictatorship are made. IETS a crag Message to Congress, Jan 11, 1944,Economic Focus eee SUBSCRIPTION ‘Annual Ethiopia Africa ‘Other Countries Nonmember Birr 23.00 || USD 10.00 USD 12.00 S 2 | | | Birr 20.00 | USD 7.00 USD 10.00 _ | Birr 16.00 USD 5.00 USD 7.00 PER COPY USD 0.60 excluding postage | | m USD 1.09 including postage | Tf you want to subscribe, please mark your preference and send this slip back to the | secretariat. (You will fing the address on the tront coves.) | pa | I Birr 2.50 | excluding postago — ————! Notes to Contributors The main objective of EEA Bulletin is to and Af conomic issu | Artick: The EEA Bull Ethiopian Economic P, O. Box 3Just pay less than 20 Birr and You will have Your ‘Economic Focus’ for the whole year !! ) Make sure to look for your latest ‘Economic Focus’ at: African Buokshop Book Cent>r at AAU The Book Wi rld Ghion Hotel MEGA Booxshops Meseret Nega Stationery Alemu Shop (Near ECA) Hadia Supermarket wos Supermarket Seyoum Shop (Near Kazanchis TOTAL) Hill-Belt Restaurant Semien Hotel . * + ¢ + o ° + o + + * PRICE BIRR 3.50 LESAN Printing Press