Ethiopia industrialization

[RVtitem]

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www.worldpoliticsreview.com/articles/19057/made-in-africa-will-ethiopia-s-push-for-industrialization-pay-off

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https://kenopalo.com/tag/premature-de-industrialization/

[RV Pundit]

Totally agree. Ethiopia is the next China. The gov has really capacity to influence policy directions..needed for industralization. Labour at 68 dollars per month...is about half of min in Kenya. They are bringing in huge hydro power. Already many chinese companies have relocated there...now I think they are about to cornered leather/shoe industry, have cellphone assemblies, car assemblies, name it.

We need to be really close to Ethiopia....lots of great things are about to happen there.

Kenya path will have to follow the rare US of A model.

[Georgesoros]

Ethiopia's govt is very organized, at least from perception. They build foundations that will propel the country forward. Laws ant its enforcement seem to be enforced. Tanzania is another one that is really building foundations. In Kenya, they build and then the foundations come later. Youll find beautiful places in Kenya, but no infrastrusture. No laws to force property developers to put infrastructure before building, so its chaos everywhere.
Case in point, Kenya's land is extremely expensive due to speculators. Why didnt the govt put in place mechanisms to counter speculation that has driven cost of infrastructure to such exhorbitant levels? By the time Kenya wakes up, it will be 2030 and Tanzania has the biggest EA economy.

[Georgesoros]

THere was talk of Konza city, but I guess speculators came and gobbled up the land, sold and resold it, until now its too expensive to build any infrastructure around the area. Vesus Tanzania's model that forbids speculation.

[Kim Jong-Un's Pajama Pants]

If Ethiopia becomes industrialized that would be a first for Sub Saharan Africa.  Let's wait and see.  They definitely have a huge advantage when it comes to low cost labor.

[RV Pundit]

Low cost labour, 80-90M strong population, Huge hydro power coming online (they are building one of Africa largest along the blue nile-6,000MW) and Gov capacity to influence things (owns all the land & can dish it left right and center). Economy is still gov controlled with no private sector allowed in key sectors like banking/telcoms/name it. Their economy has been growing at double digit the last 20yrs I think. They already overtook Kenya as largest economy in Eastern Africa...and the rate of their growth...should already be 3 or 4th biggest economy in sub-saharan Africa. This is classic China/Britain model.

Kenya economy is sophisticated, gov has very little capacity to influence anything (thanks to democracy), labour is way more expensive but more productive, economy is completly liberalized.....we cannot go the China way...there is a very rare US of A model that we can pursue. The US managed to industralize in early 20th century despite having these kenya kind of "disadvantages".

If Ethiopia becomes industrialized that would be a first for Sub Saharan Africa.  Let's wait and see.  They definitely have a huge advantage when it comes to low cost labor.

[Georgesoros]

Pundit,
Your thinking sometimes puzzles me. I disagree with you. Yes Kenya has capacity to influence the whole economy - by working hard to pass and enforce laws that benefits the majority. Current laws are not even enforced. The legislature and the executive, and the judiciary thinks that dressing in expensive suits and running around selling an image is the way, but I tell you theres more than expensive suits. Raila and Kibaki told us that paying people more money will reduce corruption, so the legislature raised there pay to astronomical figures, so did the corrupt individuals. During Moi's time - which i hated, few became rich by being civil servants. Check your latest figures - govt has become the tool to grab and be rich.
The executive sends these robbers to the judiciary, and puff the case is never resolved. Goldenberg is still going on!!. Retirements and other things mean the case will certainly be thrown out. So the wheels go round and round, same stuff  in and out.
The same scenario is now playing in the county governments. Enforcement of corruption is a term only used on paper.
Meanwhile, issues like developing the basic framework for infrastructure development necessary for economic growth is lacking. Uhuruto are busy grabbing onto everything they can get their hands on, Especially swallowing other parties so Jubilee can become the only party in the country. 
Getting back to 2030, Kenya will be left behind by Ethiopia, Tanzania, Rwanda, and Uganda, in that order. Kenyans Keep doing the same thing expecting different results.

Low cost labour, 80-90M strong population, Huge hydro power coming online (they are building one of Africa largest along the blue nile-6,000MW) and Gov capacity to influence things (owns all the land & can dish it left right and center). Economy is still gov controlled with no private sector allowed in key sectors like banking/telcoms/name it. Their economy has been growing at double digit the last 20yrs I think. They already overtook Kenya as largest economy in Eastern Africa...and the rate of their growth...should already be 3 or 4th biggest economy in sub-saharan Africa. This is classic China/Britain model.

Kenya economy is sophisticated, gov has very little capacity to influence anything (thanks to democracy), labour is way more expensive but more productive, economy is completly liberalized.....we cannot go the China way...there is a very rare US of A model that we can pursue. The US managed to industralize in early 20th century despite having these kenya kind of "disadvantages".

If Ethiopia becomes industrialized that would be a first for Sub Saharan Africa.  Let's wait and see.  They definitely have a huge advantage when it comes to low cost labor.

[RV Pundit]

You totally misunderstand and mix things up. Kenya gov (or Uhuru) like US obama has very little "power" to influence the economy compared to China or Ethiopia PM. And the answer is our constitution. Our democracy. Our economic model. Our land laws.  Uhuru is not all powerful..his power is checked by constitution, parliament, judiciary, etc etc. He has little leeway. But let get back to the ecomony and gov capacity.

1) Land - Ethiopia gov basically own all land (kenya gov has to buy land -it owns very little); Ethiopia or TZ or China (leasehold land) gov owns ALL LAND. You want to get 50,000 acres-- TZ or Ethiopia gov can give you that land tomorrow. Kenya hakuna.

2) Public sector versus Private sector. Kenya basically is private sector ran. Public institution are just regulators. Ethiopia has little public sector. Private sector is not allowed to own a bank. an ISP. telcom company. There are so many sectors ran purely by parastal -pure monopolies. The nearest you have in kenya is maybe KPLC only. What that mean is gov of Ethiopia has huge public sector that it can deploy for good or bad.

3) Dictarorship. In kenya or US people will argue about minimum wage and bla de bla. There are unions, politicians and name it. In Ethiopia gov decides and does it. Just like China. There is no minimum wage in Ethiopia. You get paid salary of 20 dollars. In kenya no company looking for low cost manufactuing can come here because minimum wage is 120USd. Ethiopia gov can dish incentives like tax cuts or whatever without caring. In kenya...parliament essentially make the budget and have to approve it.

I can go on and on. Ethiopia is BIG GOV. Kenya is a small GOv. Capacity wise...Ethiopia's is HUGE. This when used badly result into poverty that nearly 100M ethiopia find themsleves. When used correctly like now....then you're seeing 10% growth.

I would rather we keep our small gov....and depend on the private sector. This is our model. It the US model. It the India model. We cannot become Ethiopia or China.

As for TZ  -- me think outside the minning sector - they are crap. All the extra growth they have been seeing is due to minerals being discovered.Just another Sudan or Angola or Botswana or Namibia or Nigeria. They won the natural resource lottery. We have been one of unluckiest country in earth with little underneath and above ground...but we have done well.

Pundit,
Your thinking sometimes puzzles me. I disagree with you. Yes Kenya has capacity to influence the whole economy - by working hard to pass and enforce laws that benefits the majority. Current laws are not even enforced. The legislature and the executive, and the judiciary thinks that dressing in expensive suits and running around selling an image is the way, but I tell you theres more than expensive suits. Raila and Kibaki told us that paying people more money will reduce corruption, so the legislature raised there pay to astronomical figures, so did the corrupt individuals. During Moi's time - which i hated, few became rich by being civil servants. Check your latest figures - govt has become the tool to grab and be rich.
The executive sends these robbers to the judiciary, and puff the case is never resolved. Goldenberg is still going on!!. Retirements and other things mean the case will certainly be thrown out. So the wheels go round and round, same stuff  in and out.
The same scenario is now playing in the county governments. Enforcement of corruption is a term only used on paper.
Meanwhile, issues like developing the basic framework for infrastructure development necessary for economic growth is lacking. Uhuruto are busy grabbing onto everything they can get their hands on, Especially swallowing other parties so Jubilee can become the only party in the country. 
Getting back to 2030, Kenya will be left behind by Ethiopia, Tanzania, Rwanda, and Uganda, in that order. Kenyans Keep doing the same thing expecting different results.

[MOON Ki]

It is interesting to read these arguments about how the way for Kenya to industrialize is to follow the "USA model".     First thoughts that come to mind: How many countries since the start of the 20th century have done so?    (I don't know, but perhaps some examples will be given to show why Kenya should succeed.)   Are there any serious proposals elsewhere for Kenya (or any other country intending to industrialize today) to suggest that it might work for Kenya (or any other country intending to industrialize today)?   If none, is it because people do not know US history?

One of the most curious things about these arguments is the timing aspect: Kenya is to follow the "USA model", but comparisons between Kenya and the USA are being made with respect to today's USA.   Surely, a more logical argument would be to consider the USA at the time that it was industrializing.  If we look at the USA of the time, here are just a couple of points to consider:

* The USA had (and still has) an abundance of natural resources that were put to good use.  (And "value-adding" was done there, not via "export and then import".)   Kenya?

* USA manufacturers and other producers demanded and got (from the government) high tariffs on imports.   How is Kenya doing with stuff from Kung-Fu?

* Tremendous innovation that had a direct practical impact on all aspects of life.   Here is a list of some USA inventions in the period 1800-1900: https://en.wikipedia.org/wiki/Timeline_of_United_States_inventions_(before_1890)

How is Kenya doing in the innovation business?    Come to think of it, how it even doing in the "copying"  business?   

* Land:   How cheap and available was land when USA industrialization started?    As an example, just compare SGR's purchasing of land today and the USA's "railroad land grants" of the time.

[Georgesoros]

Pundit,
FYI. The provate sector controls very little. Local townships control what is built where and how much resources the entity will take - eg water roads. But the private sector has an edge in that they can use what we call an eminent domain law. This allows any project that is for public good can take away your property and compensate your at a fair market value. Example, Trump used the law to build his casinos in NJ and the owners were compensated at a rate that was fair.
In Kenya, if you wanted to build such, speculators move in and jerk up the price of land to the extent that the project will not make any money when finished. If they build it, then it has to be passed to consumers, who often complain that its too expensive and soon move to open air markets. So greed has taken over and everything is inflated to such an extent that it's not possible to build cheaper roads, sanitation systems, schools, etc.

[RV Pundit]

I think you're shooting from the hip. I meant the USA of 1900 had nearly the same conditions that we have here and that exist in India for example. I don't know if you're complaining about the constraints that we have or expressing your frustration. But I can tell you the USA became industralized...not through low cost manufacturing...but through higher productivity and efficiency in their economy..that attribute of US economy still shines through. If you don't have plenty of land and cheap labour...you can make the most of what you have. And that is what kenya shows...by far the most modern country in East Africa...with economy bigger and more sophisticated than many in Africa...yet we don't have natural resources.

Kenya and India find themselves in the same spot. It not a bad spot to be if you compare the alternative is a dictatorship gov like Ethiopia or Russia or China that at one point managed to move people forward...and often backward.

Kenya path to modernization...doesn't have to follow China or that Britain used in centuries ago or that Ethiopia are using. In any case we can't. We don't have the same conditions. We cannot dish out 30,000 acres to someone who will employ kenyans for salary of ksh 2,000 per month. That doesn't mean we cannot get into manufacturing. It just mean we have to do a little more sophisticated stuff....where productivity and efficiency pays more than primitive labour/land/capital.

Kenya is not doing that..but growing at 6%...while Ethiopia is doing 10%...TZ's 7%....therefore we can still match Ethiopia growth target of 10%...if we were to work a little bit harder and were to get lucky with natural resources.

Of course this stuff won't make much sense for people with little understanding of world's history & economics. People who see China or US now...and just want us to get there in a minute.

It is interesting to read these arguments about how the way for Kenya to industrialize is to follow the "USA model".     First thoughts that come to mind: How many countries since the start of the 20th century have done so?    (I don't know, but perhaps some examples will be given to show why Kenya should succeed.)   Are there any serious proposals elsewhere for Kenya (or any other country intending to industrialize today) to suggest that it might work for Kenya (or any other country intending to industrialize today)?   If none, is. it because people do not know US history?

One of the most curious things about these arguments is the timing aspect: Kenya is to follow the "USA model", but comparisons between Kenya and the USA are being made with respect to today's USA.   Surely, a more logical argument would be to consider the USA at the time that it was industrializing.  If we look at the USA of the time, here are just a couple of points to consider:

* The USA had (and still has) an abundance of natural resources that were put to good use.  (And "value-adding" was done there, not via "export and then import".)   Kenya?

* USA manufacturers and other producers demanded and got (from the government) high tariffs on imports.   How is Kenya doing with stuff from Kung-Fu?

* Tremendous innovation that had a direct practical impact on all aspects of life.   Here is a list of some USA inventions in the period 1800-1900: https://en.wikipedia.org/wiki/Timeline_of_United_States_inventions_(before_1890)

How is Kenya doing in the innovation business?    Come to think of it, how it even doing in the "copying"  business?   

* Land:   How cheap and available was land when USA industrialization started?    As an example, just compare SGR's purchasing of land today and the USA's "railroad land grants" of the time.

[RV Pundit]

Kenya's private sector is huge. It employs 3 times the public/gov sector in formal jobs. This is not true in every country. Informal sector is even bigger. The trick is to get the informal sector into formal sector.

Pundit,
FYI. The provate sector controls very little. Local townships control what is built where and how much resources the entity will take - eg water roads. But the private sector has an edge in that they can use what we call an eminent domain law. This allows any project that is for public good can take away your property and compensate your at a fair market value. Example, Trump used the law to build his casinos in NJ and the owners were compensated at a rate that was fair.
In Kenya, if you wanted to build such, speculators move in and jerk up the price of land to the extent that the project will not make any money when finished. If they build it, then it has to be passed to consumers, who often complain that its too expensive and soon move to open air markets. So greed has taken over and everything is inflated to such an extent that it's not possible to build cheaper roads, sanitation systems, schools, etc.

[MOON Ki]

I think you're shooting from the hip. I meant the USA of 1900 had nearly the same conditions that we have here and that exist in India for example. I don't know if you're complaining about the constraints that we have or expressing your frustration.

No need to inject emotions into this.    I have pointed out a couple aspects of the USA at the time of its industrialization.   And there are many more.   If you wish to argue about "nearly the same conditions", then what you should do is explicitly state them so that we can discuss them.   We can then get to questions such as these, with you supplying the details of how exactly we are to follow "the USA model":

How many countries since the start of the 20th century have done so?    (I don't know, but perhaps some examples will be given to show why Kenya should succeed.)   Are there any serious proposals elsewhere for Kenya (or any other country intending to industrialize today) to suggest that it might work for Kenya (or any other country intending to industrialize today)?   If none, is. it because people do not know US history?

You have stated that:

The US managed to industralize in early 20th century despite having these kenya kind of "disadvantages".

Actually the USA's industrialization phase largely occurred in the second half of the 19th century, and a great deal had already occurred before that.     

You also state that:

I meant the USA of 1900 had nearly the same conditions that we have here and that exist in India for example.

And what same conditions might those be that we have here and in India?   (I note that  the USA had become the world's largest manufacturer by around 1895, that being a direct result of the applied technological innovation indicated above.)

[Kim Jong-Un's Pajama Pants]

Low cost labour, 80-90M strong population, Huge hydro power coming online (they are building one of Africa largest along the blue nile-6,000MW) and Gov capacity to influence things (owns all the land & can dish it left right and center). Economy is still gov controlled with no private sector allowed in key sectors like banking/telcoms/name it. Their economy has been growing at double digit the last 20yrs I think. They already overtook Kenya as largest economy in Eastern Africa...and the rate of their growth...should already be 3 or 4th biggest economy in sub-saharan Africa. This is classic China/Britain model.

Kenya economy is sophisticated, gov has very little capacity to influence anything (thanks to democracy), labour is way more expensive but more productive, economy is completly liberalized.....we cannot go the China way...there is a very rare US of A model that we can pursue. The US managed to industralize in early 20th century despite having these kenya kind of "disadvantages".

If Ethiopia becomes industrialized that would be a first for Sub Saharan Africa.  Let's wait and see.  They definitely have a huge advantage when it comes to low cost labor.

Suppose we can't go the China way.  What is Kenya going to make and that the rest of the world just can't resist sourcing from there?

[Kim Jong-Un's Pajama Pants]

MOON Ki,

The way I see it.  Kenya, Uganda and Tz should have long ago by now made an economic union.  Then as one entity, they would do the right things(which are many) while marketing the region for investors to bring their factories in(Kenya, Uganda, Tz, whichever suits them).  They don't seem any closer to that than 20 years ago.  In fact the vibe seems to be negative on that front. 

[MOON Ki]

MOON Ki,

The way I see it.  Kenya, Uganda and Tz should have long ago by now made an economic union.  Then as one entity, they would do the right things(which are many) while marketing the region for investors to bring their factories in(Kenya, Uganda, Tz, whichever suits them).  They don't seem any closer to that than 20 years ago.  In fact the vibe seems to be negative on that front. 

That too is how many people and organizations whose job is exactly to "see" in such matters also see it.    For their part, the leaders of the three countries talk endlessly about "regional integration", with regular "summits" and many trees felled in producing the paperwork.     The reality, however, does not seem to match.    I'm not sure why that is so, but I get a sense of the same sort of Kenya "arrogance" that many years ago led to the demise of the embryonic union.