ATI
COUNTRY PROFILE
Ethiopia
The country’s overall ATI score in 2020 (2019-2021) averaged 19.4 on a scale of 0-100. The score falls below the African average on all DEPTH dimensions, making Ethiopia a low transformer. The country’s transformation has been hampered by stunted growth in productivity and export competitiveness, and major dips in diversification between 2011 and 2016.
Addis Ababa
126.5 million
2.5 %
6.5 %
US $1,294
Ethiopia’s Performance on the African Transformation Index
The overall African Transformation Index score measures the five dimensions of DEPTH.
Overall score
19.4 /100
Score change
since 2000
At a glance
- The country’s overall ATI score in 2020 (2019-2021) averaged 19.4 on a scale of 0-100. The score falls below the African average on all DEPTH dimensions, making Ethiopia a low transformer.
- The country’s transformation has been hampered by stunted growth in productivity and export competitiveness, and major dips in diversification between 2011 and 2016.
| Score /100 |
Change since 2000 | ||
 |
Diversification |
25.8 |
-1.4
|
 |
Export competitiveness |
0 |
-1.0
|
 |
Productivity increases |
3.2 |
+2.4
|
 |
Technology upgrading |
40.5 |
+30.6
|
 |
Human well-being |
27.6 |
+0.6
|
Diversification of production and exports measures countries’ capability to produce and export a widening array of goods and services.
Score
25.8 /100
Score change
since 2000
At a glance
- The diversification sub-index for Ethiopia shows a fluctuating trend that peaks at 32 in 2004 and dips to 23 by 2016. It then makes a slight recovery to 27 by 2019 and then drops to 26 in 2020. Recent years show minimal improvement.
- Despite manufacturing taking center stage in the government’s policy agenda with the adoption of the GTP I and GTP II, the share of manufacturing in total value added to GDP remains small and stagnated—averaging 5 percent over the past two decades.
- The service sector remains the largest contributor to GDP with the construction sector showing a significant improvement in terms of valued added to GDP over the period.
- There has also been a substantial increase in the share of manufactured goods and services in total exports of goods and services, rising from a low of 48.4 percent in 2013 to 63.9 percent in 2020. But the share of the top five merchandise exports (coffee, oil seeds, cut flowers, vegetables and dried legumes) constituted 76.8 percent of total exports in 2020 ––reflecting a lack of diversification in exports.
Export competitiveness is measured as the ratio of a country’s share in the world’s exports of non-extractive goods and services to its share in world non-extractive GDP.
Score
0 /100
Score change
since 2000
At a glance
-
The country’s persistently low score on this dimension implies that Ethiopia struggled significantly to enhance export competitiveness during this period, likely due to a limited export base focused on low-value goods or a lack of competitive export capabilities.
-
Ethiopia is one of the few countries in Africa whose exports are driven by government commitment to an agricultural-led export strategy, rather than an extractive-led one.
-
Although exports grew by an annual average of 5.9 percent over the past five years and the country introduced over 20 new export products, the Ethiopian economy still performed below the African average on export competitiveness. This occurred because the country’s exports are dominated by narrow commodities (particularly agricultural exports) whose prices are volatile relative to more complex global non-extractive exports.
-
The country’s low export competitiveness is also a result of its inability to exploit a narrow window of opportunity for export diversification due to challenges such as export logistics and trade facilitation.
-
An overvalued real exchange rate and high tariffs also encourage inward domestic trade.
Productivity increases measure the value added per unit of labor in agriculture, manufacturing, and services.
Score
3.2 /100
Score change
since 2000
At a glance
- Average output per worker declined from a peak of 8.9 percent in 2010 to less than 5 percent by 2020.
- Over the two decades under review, labor productivity grew fastest in the manufacturing sector, followed by the service and agricultural sectors.
- Although productivity per worker in the agricultural sector was low, the strong emergence of the manufacturing sector was mainly propelled by capital deepening, which seemingly raises workers’ productivity without compensating for worker skills improvement. Thus, weakening the economy’s total factor productivity in the long term.
- Despite making significant sector productivity gains, the country’s productivity score under the ATI remained low and stagnant through the early years, and only started showing small improvements from 2015. This uptick, while modest, might reflect early gains from industrialization efforts or investments in productivity improvements. However, the country’s performance remains far below the African average.
Technology upgrading measures the medium-and high-technology content in total production activities and total commodity exports.
Score
40.5 /100
Score change
since 2000
At a glance
- Ethiopia made the most progress on technology upgrading. The country’s score on this dimension increased by 30.6 points to 40.5 (on a scale of 0 to 100), but the progress stagnated from 2015 to 2020.
- Ethiopia’s technology gains reflect its focus on export-oriented industrial parks in textiles, garments, leather, and pharmaceuticals. But while foreign-local firm linkages remain limited, those established have boosted productivity, highlighting potential for broader technology diffusion with supportive policies.
- As such, the share of medium and high-tech exports in manufactured exports increased from 1.94 percent in 2000 to 40.15 percent in 2017.
- Similarly, the share of medium and high tech manufacturing value added in manufacturing value added increased from 9.57 percent in 2000, reaching 16.28 percent by 2014, and remaining stagnant around 16 percent through 2020.
Human well-being measures economic and social outcomes and enablers in terms of incomes, income inequality, formal employment, and female participation in formal labor markets.
Score
27.6 /100
Score change
since 2000
At a glance
- Ethiopia's human well-being score experienced a consistent decline from 2000 to 2011. However, it saw a substantial improvement in 2020, achieving an ATI score of 27.6 that year for this dimension.
- There is still a major policy challenge in translating the stellar economic growth that tripled the country’s per capita income from $199 to $623 between 2000 and 2020 into decent job creation.
- The stability and slight improvements on this dimension in recent years may indicate better access to basic services and education, as well as health care improvements.
- However, the index’s limited growth shows that these improvements have been slow and still need substantial reinforcement to have broader societal impacts.
Discover more from the ATI
ATI Scorecard
Explore the data behind the economic transformation progress of 30 African countries between 2000-2020.
Growth with DEPTH
Explore the ATI in DEPTH and see how African countries performed on each dimension between 2000-2020.
Methodology
Learn more about our methodology, sources, and how we calculate the index.
Country Profiles
To explore the results of the index in greater detail and provide context and analysis, the ATI report includes 11 case studies.
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