Industrial development policy of Ethiopia

Between 1950 and 1960, the

industrialization policy included a range of fiscal incentives, direct government investment, and equity participation in private enterprises.^[1]

The government's policy attracted considerable foreign investment to the industrial sector. For instance, in 1971/72 the share of foreign capital in manufacturing industries amounted to 41 percent of the total paid-up capital. Many foreign enterprises operated as private limited companies, usually as a branch or subsidiary of multinational corporations. The Dutch had a major investment (close to 80 percent) in the

Greeks maintained an interest in shoes and beverages. Italian investors also worked in building, construction, and agricultural industries.^[1]

Under the Derg

In 1975 the

socialist in philosophy and intent. The policy identified three manufacturing areas slated for state involvement: basic industries that produced goods serving other industries and that had the capacity to create linkages in the economy; industries that produced essential goods for the general population; and industries that made drugs, medicine, tobacco, and beverages. The policy also grouped areas of the public and private sectors into activities reserved for the state, activities where state and private capital could operate jointly, and activities left to the private sector.^[1]

The 1975 nationalization of major industries scared off foreign private investment. Private direct investment, according to the

United States nationals continued until 1985, when Ethiopia agreed to pay about US$ 7 million in installments to compensate United States companies.^[1]

Issued in 1983, the Derg's Proclamation No. 235 (the Joint Venture Proclamation) signaled Ethiopia's renewed interest in attracting foreign capital. The proclamation offered incentives such as a five-year period of income tax relief for new projects, import and export duty relief, tariff protection, and repatriation of profits and capital. It limited foreign holdings to a maximum of 49 percent and the duration of any joint venture to twenty-five years. Although the proclamation protected investors' interests from expropriation, the government reserved the right to purchase all shares in a joint venture "for reasons of national interest." The proclamation failed to attract foreign investment, largely because foreign businesses were hesitant to invest in a country whose government recently had nationalized foreign industries without a level of compensation these businesses considered satisfactory.[1]

In 1989 the government issued Special Decree No. 11, a revision of the 1983 proclamation. The decree allowed majority foreign ownership in many sectors, except in those related to public utilities, banking and finance, trade, transportation, and communications, where joint ventures were not allowed. The decree also removed all restrictions on profit repatriation and attempted to provide more extensive legal protection of investors than had the 1983 proclamation.^[1]

President

underground economy.^[1]

References

^ ^a ^b ^c ^d ^e ^f ^g Wubne, Mulatu. "Agriculture". A Country Study: Ethiopia (Thomas P. Ofcansky and LaVerle Berry, editors). Library of Congress Federal Research Division (1991). This article incorporates text from this source, which is in the public domain.[1].

[cs-1] ^ ^a ^b ^c ^d ^e ^f ^g Wubne, Mulatu. "Agriculture". A Country Study: Ethiopia (Thomas P. Ofcansky and LaVerle Berry, editors). Library of Congress Federal Research Division (1991). This article incorporates text from this source, which is in the public domain.[1].

[1]

Under the Derg

See also

References