海外发展研究所-“一带一路”与埃塞俄比亚企业：发展的风险与机遇（英）-2021.8-61正式版

ReportTheBeltandRoadandChineseenterprisesinEthiopiaRisksandopportunitiesfordevelopmentLindaCalabrese,ZhengliHuangandRebeccaNadinAugust2021每日免费获取报告1、每日微信群内分享7+最新重磅报告；2、每日分享当日华尔街日报、金融时报；3、每周分享经济学人4、行研报告均为公开版，权利归原作者所有，起点财经仅分发做内部学习。扫一扫二维码关注公号回复：研究报告加入“起点财经”微信群。。Readersareencouragedtoreproducematerialfortheirownpublications,aslongastheyarenotbeingsoldcommercially.ODIrequestsdueacknowledgementandacopyofthepublication.Foronlineuse,weaskreaderstolinktotheoriginalresourceontheODIwebsite.Theviewspresentedinthispaperarethoseoftheauthor(s)anddonotnecessarilyrepresenttheviewsofODIorourpartners.ThisworkislicensedunderCCBY-NC-ND4.0.Howtocite:Calabrese,L.,Huang,Z.andNadin,R.(2021)TheBeltandRoadandChineseenterprisesinEthiopia:risksandopportunitiesfordevelopment.ODIreport.London:ODI(/en/publications/the-belt-and-road-and-chinese-enterprises-in-ethiopia-risks-and-opportunities-for-development).Photo:Workerinagarmentfactory,Ethiopia.©DavideScalenghe()AcknowledgementsThisreportistheoutcomeofastudybyLindaCalabreseandRebeccaNadin(ODI)andZhengliHuang(TongjiUniversity).TheauthorsaregratefultoJudithTyson,DirkWillemteVelde(ODI)andLaurenJohnston(SOASUniversityofLondon)fortheircommentsandfeedbackonanearlierdraft.Responsibilityforthefinalcontentrestswiththeauthorsalone.TheviewsexpressedshouldnotbeattributedtoODI.AbouttheauthorsORCIDnumbersaregivenwhereavailable.PleaseclickontheIDiconnexttoanauthor’snameinordertoaccesstheirORCIDlisting.LindaCalabreseIDResearchFellowwiththeInternationalEconomicDevelopmentGroup,ODI.Adevelopmenteconomistbytraining,sheworksontradeandinvestment,industrialisationandeconomictransformation.HerresearchinterestsincludeChineseoutwardinvestmentandtheBeltandRoadInitiative,andsheleadsODI’sworkonChina–Africa.ShehasextensiveexperienceinEastAfrica,workingasaneconomistwithvariousgovernmentandresearchinstitutions.ZhengliHuangPost-doctorateresearcheratTongjiUniversity,Shanghai.ShehasworkedasResearchAssociateattheUniversityofSheffieldintheUKandtheChineseUniversityofHongKong.ShewasLuceVisitingScholarinTrinityCollegeintheUS.ShehasarichfieldworkexperiencethroughworkinginUN-Habitat’sslumupgradingprojects,herroleasProjectManagerinbuildingaschoolinNairobi’sinformalsettlements,andvariousresearchprojectsonChineseinfrastructuredevelopmentinAfrica.HerworkfocusesonAfricanurbanisationandChina’simpactonurbandevelopment,especiallyonhousing,urbangovernanceanddevelopmentfinance,andgeographicallycoveringEthiopiaandtheEastAfricanregion.RebeccaNadinDirectorofODI’sGlobalRisksandResilienceprogrammeandtheHeadofODI’sGlobalChina2049initiative.Shemanagesateamofpolicyanalystsandexpertsexploringtheriskemergingfromintersectingglobalchallengessuchasclimatechange,transnationalcrimeandgeopoliticalvolatility.AChinapolicyexpertwithafocusonChina’semerginggeopoliticalstrategy,nationalsecurityandclimatepolicy,hercurrentfocusisonunderstandingthepotentialenvironmental,socialandpoliticalrisksand/oropportunitiesthatmayarisefromChina’sevolvingglobaloutreachforhostcountriesandotherkeystakeholders.ContentsAcknowledgements/ iDisplayitems/ iiiAcronyms/ ivExecutivesummary/ 1Introduction/ 3Ethiopia’sdevelopmenttrajectory/ 52.1Ethiopia’sdevelopmentcontext / 52.2Challengesarising:Covid-19inEthiopia / 102.3Lookingforward:Ethiopia’sdevelopmentplans / 11ChineseenterprisesinEthiopia/ 183.1SectoralanalysisofChineseinvestment / 183.2TypologiesofChineseenterprises / 193.3EmergingtrendsinChineseinvestmentinEthiopia / 20DriversandrisknarrativesofChineseenterprises/ 224.1DriversofChineseenterprisesinEthiopia / 224.2RisknarrativesofChineseinvestors / 254.3RiskappetiteofChineseinvestors / 29RisksandopportunitiesinEthiopia–Chinainvestmentrelations/ 325.1RelianceonChinaasasourceofforeigninvestmentandinfrastructurefinancing / 325.2Debtsustainability / 335.3Potentialcrowdingoutofdomesticinvestors / 355.4Spilloversfromforeigninvestment / 365.5OpportunitiestocontributetoAfrica’seconomicintegration:buildingtheAfricanContinentalFreeTradeArea / 36Conclusionsandrecommendations/ 39References/ 42Appendix ChineseloancommitmentstoEthiopia,2000–2018 / 49DisplayitemsFiguresFigure1Grossvalue-addedbysectoratconstant2015prices / 6Figure2Employmentbysector / 6Figure3Exportsbysector,2000–2017 / 7Figure4Totalexportsandimports / 7Figure5Foreigndirectinvestment(FDI)flowsbysector,2014–2018 / 9Figure6Grossvalue-addedbysector(industryonly),atconstant2015prices / 10Figure7EthiopianexportstoandimportsfromChina,2000–2018 / 13Figure8EthiopianexportstoChina(left)andimportsfromChina(right),2018 / 13Figure9ChineseforeigndirectinvestmentflowstoEthiopia / 14Figure10ChineseloancommitmentstoEthiopia,2000–2018 / 15TablesTable1Chineseinvestmentprojectsbysector,1999–2017 / 19TableA1ChineseloancommitmentstoEthiopia,2000–2018/ 49BoxesBox1Ethiopia’sindustrialparkdevelopmentmodel / 8Box2ChinesedigitalinfrastructureinEthiopia / 16Box3TheoriginoftheEasternIndustrialZone / 21Box4Heightenedpoliticalrisk:theTigrayconflict / 28Box5RisksalongtheEthiopia–Djiboutirailway / 37AcronymsAfCFTAAGOABRICADFundCCECCCDBCRECDACDSSIEICEIZEPRDFERCETBeWTPEximbankFDIHLMZICTIMFIPDCLRTMOFCOMMoUODAOEM

AfricanContinentalFreeTradeAreaAfricanGrowthandOpportunityActBeltandRoadInitiativeChina–AfricaDevelopmentFundChinaCivilEngineeringConstructionCorporationLtd.ChinaDevelopmentBankChinaRailwayEngineeringCorporationDevelopmentAssistanceCommitteeDebtServiceSuspensionInitiativeEthiopianInvestmentCommissionEasternIndustrialZoneEthiopianPeople’sRevolutionaryDemocraticFrontEthiopianRailwayCorporationEthiopianbirrelectronicWorldTradePlatformExport-ImportBankofChinaforeigndirectinvestmentHuajianLightManufacturingZoneinformationandcommunicationstechnologyInternationalMonetaryFundIndustrialParkDevelopmentCorporationlightrailtransitMinistryofCommerce,People’sRepublicofChinamemorandumofunderstandingofficialdevelopmentassistanceoriginalequipmentmanufacturerpublic–privatepartnershipSASACSMESOE

State-ownedAssetsSupervisionandAdministrationCommissionoftheStateCouncilsmallandmedium-sizedenterprisesstate-ownedenterpriseTPLF

TigrayPeople’sLiberationFrontZTE

ZhongxingTelecommunicationEquipmentCorporationODIReportExecutivesummaryChina’sBeltandRoadInitiative(BRI)hasthepotentialtoopenupnewdevelopmentpathwaysthroughinfrastructuredevelopment,stimulatinginvestmentandjobcreationandpromotingeconomictransformationinhostcountries.Throughitsfiveareasofcooperation(infrastructureconnectivity,trade,financialcooperation,policyandpeople-to-peopleexchanges),theBRIcanbeanengineforgrowthanddevelopment.However,thisisnotagiven–asapowerfulexternalchangeagent,theBRIalsohasthepotentialtoincreasearangeofeconomic,environmentalandpoliticalriskswithinhostcountries.Theserisksarenotseparateanddistinct,butratherdynamicallyinterconnected(Opitz-Stapletonetal.,2019).EthiopiahasacloseeconomicandpoliticalrelationshipwithChina,andistherecipientofalargeamountofinvestmentbylargeandsmallChineseenterprises,aswellaslendingbytheChinesegovernment,policyandcommercialbanks,andstate-ownedenterprises(SOEs).Theseinvestmentandlendingflowscreatebothriskandopportunities.Therisksaretwo-fold:totheEthiopiandevelopmentprocess,andtoChineseinvestorsthemselves.Thisreportseekstojointhetwo,articulatingtheriskperceptionsandappetiteofChineseinvestors,andthepotentialimpactthesewillhaveonEthiopia’seconomicdevelopment.ThereisahugediversityofChineseenterprisesoperatinginEthiopia.Differencesamongthemincludetheirownership(public,atthecentralstateorotherlevels,orprivate),theirsizeandthesectorswheretheyoperate.TheyarealsodriventoinvestinEthiopiabydifferentfactors,

andperceivedifferentrisksindifferentways.ThereportexploresunderlyingvulnerabilitiesgivingrisetoChineseinvestors’concerns,basedonareviewoftheliteratureandinterviewsinEthiopiain2019andadditionalmaterialcollectedtounderstandtheimpactofCovid-19andofcurrentpoliticalunrest.ThereportshowsthatChineseinvestorsareconcernedabouteconomicandpoliticaluncertaintyinEthiopiaaffectingnotonlyinvestors’profitability,butalsothepersonalsafetyoftheirstaff.Economicchallengesrelatetohighproductionandtransportcostsandthechallengesofaccessingforeignexchange,whichisaproblemforvirtuallyallChinesebusinessesinthecountry.Assessingthesituationofotherforeign(non-Chinese)investmentwasbeyondthescopeofthiswork,butitislikelythatsuchchallengeswillsimilarlyaffecttheseinvestors.Thesechallengesarenotonlyaproblemforthefirmsthemselves–theyalsoaffectEthiopia’sdevelopmentpath.Morebroadly,thereportalsoidentifiestheopportunitiesthattherelationshipwithChina,andmorespecificallywithawidevarietyofChinesefirms,offerstoEthiopiaintermsofjobcreation,increasedproductionandexportsandinfrastructuredevelopment,bothnationallyandregionally.Atthesametime,ithighlightsthepotentialrisksintermsofapotentialoverrelianceonChinaanddebtsustainability.GivenEthiopia’srelianceonChinaasasourceofinvestmentandfinance,issuesaffectingChinesefirmsmayhaveadeepimpactonEthiopia’sfuturedevelopment.Inthissense,addressingtheseissueswouldbebeneficialtotheEthiopianeconomymorebroadly.ODIReportThissuggestsseveralrecommendationsfortheEthiopiangovernment,withthesupportofdevelopmentpartners,andforChinesefinancinginstitutions.RecommendationsfortheEthiopiangovernment:Focusonmitigatingtheeconomicandfinancialrisksfacedbyinvestors,especiallycompaniesoperatinginmanufacturing,andinparticularonexport-orientedsectors.Strengthenscreeningofnewlending,includingimprovingscreeningofthefinancialimpactofinfrastructureprojectsinrelationtogrowth,andthefeasibilityoftheirrepaymentschedule.Considernewinfrastructurefinancingmodalities,suchaspublic–privatepartnerships(PPPs),whilecarefullyassessingthepotentialdownsides.StrengthentheEthiopiangovernment’sabilitytoplan,designanddevelopinfrastructure.Othercountriesfacedwithsimilarchallengeshaveadoptedinnovativesolutions.ThesecouldbestudiedandadaptedtotheEthiopiancontext.

SupportthecreationoflinksbetweenEthiopianandforeignfirmstofosterknowledgeandtechnologytransfer.Thiscanbedoneviasupportandmatchingprogrammes,andbyprovidingimprovedaccesstocapitalforEthiopianfirms.RecommendationsforChinesefinancinginstitutions:AlignfinancingprogrammestothegrowthmodelandprioritiesoftheEthiopiangovernment.Forinfrastructuredevelopmentprojects,engageawiderrangeofexpertise(beyondengineeringspecialists)toincludeplanning,socialandenvironmentalissues.Thiswillensurethattheseprojectssupporteconomicdevelopmentintheborrowingcountry.WorkalongsidetheEthiopiangovernmenttocreateacoordinationstructureforbilateralcooperationinvarioussectors,includinglarge-scaleinfrastructure,toensurethatinfrastructureprogrammesareplannedandimplementedtofacilitatethecountry’sstructuraltransformationstrategies.ODIReport1 IntroductionChina’sBRIhasthepotentialtoopenupnewdevelopmentpathwaysthroughinfrastructuredevelopment,stimulatinginvestmentandjobcreationandpromotingeconomictransformationinhostcountries.Throughitsfiveareasofcooperation(infrastructureconnectivity,trade,financialcooperation,policyandpeople-to-peopleexchanges),theBRIcanbeanengineforgrowthanddevelopment.However,thisisnotagiven–asanexternalchangeagent,theBRIalsohasthepotentialtoincreasearangeofeconomic,environmentalandpoliticalriskswithinhostcountries.Theserisksarenotseparateanddistinct,butratherdynamicallyinterconnected.Forinstance,economicshocksasaresultofnaturalhazards,conflictorhealthemergenciescangeneratepoliticaltensions,whichinturnbecomepoliticalrisks,andeconomicrisksiftheydriveawayinvestment(Opitz-Stapletonetal.,2019).Thisisparticularlytrueforinfrastructureconnectivity,themost‘visible’partoftheBRI,butitextendstootherareasaswell.EthiopiahasacloseeconomicandpoliticalrelationshipwithChina,andistherecipientofalargeamountofinvestmentbylargeandsmallChineseenterprises,aswellaslendingbytheChinesegovernment,policyandcommercialbanks,andSOEs.ChineseinvestmentinEthiopiahasbeenexploredindepthintheliterature,particularlyinrelationtodrivers,challengesanddevelopmentalimpacts(GedaandMeskel,2010;Adem,2012;SeyoumandLin,2015;Seyoumetal.,2015;Oya,2019;OyaandSchaefer,2019).Therisks(actualorperceived)ofChineseinvestmentinEthiopiahavenotbeensodeeply

explored.Thesearetwo-fold,entailingrisksbothtotheEthiopiandevelopmentprocessandtoChineseinvestors.Thisreportseekstojointhetwo,articulatingtheriskperceptionsandappetiteofChineseinvestors,andthepotentialimpactsthesewillhaveonEthiopia’seconomicdevelopment.ThereportexploresunderlyingvulnerabilitiesofconcerntoChineseinvestorsandenterprisesbasedonareviewoftheliteratureandinterviewsprimarilyundertakeninEthiopiainOctober–November2019.ItalsodrawsonadditionalmaterialontheimpactofCovid-19andcurrentpoliticalunrest.RatherthangenericallydiscussingChineseinvestmentinEthiopia,thereportlooksatChineseenterprisesundertakingandimplementingactivitiesrangingfromcapitalinvestment(suchassettingupmanufacturingfirms)toinfrastructureconstruction,usuallythroughengineeringcontracts.Investments,inparticularforeigndirectinvestment(FDI)andinfrastructureconstruction,whilestronglyinterrelated,infactrespondtodifferenteconomiclogicsandthereforehavedifferentimpactsontheEthiopianeconomy.ChineseenterprisesandfirmsinEthiopiaareverydiverse,rangingfromsmallandlargeprivatefirmstolargeSOEsatthestateorprovinciallevel.Differentfirmsoperatingindifferentsectorswillrespondtodifferentdriversandlogics.Thistoowillbecomeclearinthereport.TheBRI’smostprominentmanifestationisitsinfrastructurecomponent,andinEthiopiatheinfrastructureprojectmostcommonlyassociatedwiththeBRIistheEthiopia–Djiboutirailway.ButtheBRIismuchbroaderthaninfrastructure,withODIReportmanyotherconnectivityinitiativesfallingundertheBRIheading,includingindustrialparksandindustrialcooperationbetweenEthiopiaandChina.Forthisreason,thisreportalsodiscussesindustrialparks,andmorebroadlyinvestmentinmanufacturing.Thereportisstructuredasfollows.Chapter2providesanoverviewofEthiopia’sdevelopmenttrajectory,bothingeneralandspecificallyinrelationtoChina’seconomicengagementinthecountry.Chapter3focusesonChineseinvestmentintheEthiopianmanufacturingsector,Chapter4exploresthedriversand

risknarrativesofChineseinvestorsinthecountry,andChapter5analysestherisksandopportunitiesgeneratedbyChineseinvestmentandinfrastructure-buildingtoEthiopia’sdevelopmenttrajectory.Asthisreporthighlights,ChineseenterprisesandfirmsinEthiopiaarenothomogeneous,insteadtheyarediverseinnature,rangingfromsmallandlargeprivatefirmstolargeSOEsatthestateorprovinciallevel.Consequently,differenttypesoffirmsoperatingindifferentsectorswillalsorespondtodifferentdriversandlogics.Chapter6concludesandprovidespolicyrecommendations.ODIReport2Ethiopia’sdevelopmenttrajectoryEthiopiaisAfrica’ssecondmostpopulousstate,withover110millionpeople,andoneoftheworld’sfastest-growingeconomiesoverthelastdecade.ThischapterreviewsEthiopia’spoliticalandeconomiccontext,thecountry’scurrentdevelopmenttrajectoryandrelationsbetweenChinaandEthiopia.Thisisimportanttounderstand,asitthiscontextthatultimatelydrivesandframestheriskappetiteofChineseinvestors,andtheirpotentialimpactsontheEthiopianeconomy.2.1Ethiopia’sdevelopmentcontext2.1.1PoliticalcontextIn2018,AbiyAhmedassumedthepositionofPrimeMinister,replacingthegovernmentthathadruledthecountrysince1991inatransitionprocessthatbeganwiththedeathofMelesZenawiin2012,andcontinuedunderHailemariamDesalegn.Abiy’sgovernmenthasintroducedaseriesofchanges.Politically,themostnotablehasbeenthesigningofajointpeacedeclarationbetweenEthiopiaandEritreain2018,forwhichAbiywasawardedtheNobelPeacePrizein2019.However,thepeaceprocessseemstohaveachievedlimitedresults,andisstalling(Hirt,2019;Marchal,2020).Abiyhasalsointroducedeconomicreforms(termed‘HomeGrownEconomicReform’)aimedatprivatisingstateassets,inparticularSOEs,inanattempttoopenuptheeconomy,startingwiththetelecomsandlogisticssectors(BarberandPilling,2019;SolimanandDemissie,2019).Eventhough

thesereformshaveprogressedslowly,theysignalthatthecurrentgovernmentwantstoadjustthecourseofeconomicpolicyfollowedbythepreviousadministration.Abiy’stenurehasnotbeenwithoutchallenges.In2019and2020,motivatedbypoliticaltensionsamongethnicgroups,clashesbrokeoutinvariousregionsinthecountry,leavingmanydead(InternationalCrisisGroup,2019;Pilling,2020).Some1.8millionpeoplehavebeendisplacedbyconflictandtheeffectsofclimatechange(IOM,2020),andmanymorerequirefoodassistance.Thegovernmentregularlyshutsdowntheinternetasatemporarymeasurearoundtheseconflicts,andtopreventthespreadofprotests(Anna,2020;Getachew,2020).Politicalunrestisalsoaffectingbusiness.InoneWorldBankstudy,aroundhalfofbusinessesinterviewedreportedsufferingdisruptionandlossescausedbytheprotestsin2020(Abebeetal.,2020a).2.1.2EconomiccontextDespitebeingalandlockedcountrywithlimitednaturalresourcesinaresource-richcontinent,Ethiopiahasachievedremarkablegrowthratesinrecentyears,albeitfromalowbase.1Evenso,GDPpercapitawas$856in2019,makingEthiopiaalow-incomecountry(ibid.).Asdomesticpolicieshaveshiftedthefocusfromagriculture-ledtomanufacturing-ledgrowth,GDPgrowthhasbeenaccompaniedbystructuraltransformation,withnon-traditionalsectorsofIntheperiod2010–2019,thecountryaveragedgrossdomesticproduct(GDP)growthof9.8%,peakingat$95billion(WorldBank,n.d.).ODIReporttheeconomyexpandinginthepastdecade.Figure1showsthatagriculturehasshrunkasashareofGDP,whilethesharesofconstructionandtradeserviceshaveincreased.However,agricultureremainsthedominantsourceoflivelihoodformanyEthiopians,employing

over60%ofthepopulation(Figure2).Mostofthepopulationisemployedinrelativelylowvalue-addedsectors,andthefourmostproductivesectorsoftheeconomy(transport,construction,miningandutilities)employaround5%ofthepopulation.Figure1Grossvalue-addedbysectoratconstant2015pricesShareofGDP(%)

10080604020020002005201020152018AgricultureMiningManufacturingUtilitiesConstructionTradeservicesTransportservicesBusinessservicesFinancialservicesRealestateGovernmentservicesOtherservicesSource:deVriesetal.(2021)Figure2EmploymentbysectorShareoftotalemployment(%)

100908070605040302010020002005201020152018AgricultureMiningManufacturingUtilitiesConstructionTradeservicesTransportservicesBusinessservicesFinancialservicesRealestateGovernmentservicesOtherservicesSource:deVriesetal.(2021)ODIReportOverthepasttwodecadesEthiopiahassoughttoincreaseexports.GrowthinexportsoftransportservicesandlogisticshasbeendrivenbyEthiopianAirlinesBusinessGroup,whichhasbecomeaworld-Figure3Exportsbysector,2000–201776billions)54($3210

leadingenterprisewithadiversifiedbusinessportfolio(Balchinetal.,2019).Figure3showsthatexportsgrewsix-foldbetween2000and2017,withservicesexportsmakingupalargepartoftheincrease.200020022004200620082010201220142016ServicesChemicals,vehicles,machinery,electronicsandotherStone,mineralsandmetalsAgricultureTextilesSource:TheGrowthLabatHarvard(n.d.)Goodsexportshavestagnatedinthelastdecade,andhavelaggedbehindimports,whichhavegrownexponentially,asshowninFigure4.Themainexportproductsareagriculturalgoods,coffeeinparticular,butgarmentsaregainingin

importance.2Intermsofmarkets,mostEthiopianexportsgotoAsia(Chinainparticular),followedbyEuropeandNorthAmerica.ThebiggestsinglemarketforEthiopiangoodsisthe(US).Figure4TotalexportsandimportsSource:UNSD(n.d.)In2018,Ethiopiandatareportsexportsofgarments,textilesandfootwearworth$47million,$2millionand$27millionrespectively,comparedto$391millioninexportsofteaandcoffee.ODIReportThegrowthininflowsofforeigninvestmentintoEthiopiaistheresultofactiveeffortstopromoteinvestment,especiallybytheEthiopianInvestmentCommission(EIC),whichhassoughttoattract

foreigncapitaltowardsmanufacturingthroughanambitiousindustrialparkprogramme(seeBox1).ManufacturinginvestmenthascomprisedmorethanhalfoftotalFDIoverrecentyears(Figure5).Box1Ethiopia’sindustrialparkdevelopmentmodelTheEthiopianmodelofindustrialdevelopmentreliesheavilyonindustrialparks.GivenEthiopia’slargeinfrastructuregaps,anapproachtoindustrialisationbasedonindustrialparksissensible,asitallowsforthebuildingofinfrastructurespecificallytargetedatproduction–namelytheparksthemselvesandthetransportinfrastructureconnectingthemtotherestofthecountry–withouthavingtoaddressthewholecountry’sinfrastructuredeficitatonce.Currently,thecountryhas14industrialparkswhichareatleastpartlyoperational,withmoreunderconstruction(EIC,2021).Somearegovernment-builtthroughtheIndustrialParkDevelopmentCorporation(IPDC),whileotherswereestablishedbyprivateinvestors(suchastheEasternIndustrialZone,discussedinmoredetailinChapter3).OneflagshipexampleistheHawassaIndustrialPark.LocatednearLakeHawassa,275kmfromthecapital,AddisAbaba,thisisa300-hectareeco-park,mostlypoweredbyhydro-electricityandbuiltaroundenergyandwaterconservationprinciples.Mainlycentredontextileandgarmentproducts,theparkaimstoworkincollaborationwiththenewlybuiltHawassaUniversity.Ethiopia’sindustrialparksBahir-DarIPMekelleIPKombolchaIPDebre-BerhanIPAyishaIPBoleLemi1Dire-DawaIPBoleLemi2ArertiIPHuajianIPAdamaIPHimma-IPAdamaHnuanHawassaIP-PhaseIEasternIndustryZoneHawassaIP-PhaseIINote:IP=industrialparkSource:EIC(2020)ODIReportFigure5Foreigndirectinvestment(FDI)flowsbysector,2014–2018Source:UNSD(n.d.)Despitestrongforeigninvestmentinthemanufacturingsector,inrecentdecadesindustrialgrowthhasbeendrivenbyconstruction.This,inturn,haspromotedgrowthinconstructionmaterialmanufacturing,inparticularcement,asectordominatedbyEthiopian(ratherthanforeign)firms(Oqubay,2016).Asanintegralpartofgovernmentdevelopmentalprogrammes,infrastructuredevelopmentandtheconstructionsectorhaveattractedrobustpublicexpenditure,servingasacatalystforEthiopia’srapideconomicdevelopment.3TheNationalUrbanDevelopmentPolicy,whichencouraged

infrastructuredevelopmenttoenhancerural–urbanlinksandhousingconstructioninurbanareas,becameoperationalin2005.Infrastructuredevelopmentpolicieshavealsocontributedtostimulatinggrowthinthedomesticconstructionmarketandasignificantincreaseinemploymentinthesector.Growthintheconstructionsectorcontinuedtosurgeasthegovernmentbeganpromotingmanufacturing.TheconstructionofsugarfactoriesintheSouthernregion,andthepromotionofthenationwideindustrialparksprogramme(seeBox1),openedupopportunitiesforforeignconstructioncompanies,includingChineseentities.OneexampleofinfrastructuredevelopmentattheregionallevelistheLamuPort–SouthSudan–EthiopiaTransport(LAPSSET)Corridor,whichwilllinkKenyawithEthiopia,UgandaandSouthSudan.Plansfortheproject,estimatedat$25billion,includearailway,ahighway,acrudeoilpipelineandafibre-opticcableconnectingthefourcountries,aswellasairports,resortcities,anoilrefinery,aportinLamuandotherprojects.AnotherexampleistheBerberacorridor,atradecorridorthatfollowsahistoricaltradingrouteconnectingBerberaPortinSomalilandwiththeEthiopianhinterland.ODIReportFigure6Grossvalue-addedbysector(industryonly),atconstant2015pricesEthiopianbirr(million)

400,000350,000300,000250,000200,000150,000100,00050,0002000 2005 2010 2015 2018MiningManufacturingUtilitiesConstructionSource:deVriesetal.(2021)Ethiopiareceivesfinancialsupportthroughaidandlending.NetaidreceivedfromDevelopmentAssistanceCommittee(DAC)membersstoodat$4,810millionin2019,or5%ofgrossnationalincome(GNI).TheUS,theUnitedKingdom(UK),GermanyandtheEuropeanUnion(EU)aremajorDACdonors(OECD,n.d.).ChinaisnotaDACmember,andthereforethisdatadoesnotincludeChineseaid.Intermsoflending,Ethiopiahasatotaldebtof$29billionowedtoawiderangeoflenders,includingChina,theWorldBankandcountriesintheMiddleEast(Eometal.,2018).DatafromtheDebtServiceSuspensionInitiative(DSSI)showsthatChinaisthelargestcreditorinEthiopia,withoutstandingdebtof$8.7billion(32%ofEthiopia’stotalexternaldebt).4TheWorldBankisclosebehind,at31%.HigherinterestratesforChineseloansmeanthatChinamadeup42%ofdebt