Rural-Urban Transformation in Ethiopia - Implications for Development Strategies

ETHIOPIAN DEVELOPMENT RESEARCH INSTITUTE
The Rural-Urban Transformation in Ethiopia:
Implications for Development Strategy
Paul Dorosh and Emily Schmidt
IFPRI ESSP-II
Ethiopian Economic Association Conference
June 24, 2010
Addis Ababa
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Ethiopia Strategy Support Program – II (2008-2012)
Goal: Enhance national capacity for evidence-based policies for pro-poor growth
Objectives
Generate policy research results to fill key knowledge gaps
Build a stronger and more integrated knowledge support system
Strengthen the capacity of Ethiopian policy research institutions
Contribute to the design and implementation of a national monitoring and evaluation system for the rural sector
Main/Major Activities
Joint evidence-based, policy-relevant research with EDRI and other institutions: (ex. determinants of agricultural productivity, implications of foreign exchange rationing, rural-urban transformation, watershed investments)
Capacity building through institutional support to EDRI, CSA, MoARD, training courses. and funding of five PhD students at international universities
Dissemination of research results through workshops, conferences, internet and publications
Donors: USAID, DFID, CIDA, Irish Aid
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Plan of Presentation
Ethiopia’s changing economic landscape
Structural shifts: sectoral and spatial
A brand new world for economic development
Research papers
Rural-Urban Migration in Ethiopia (Valerie Mueller and Tassew Woldehanna)
Trends in Household Expenditure and Welfare (Kibrom Tafere and Alemayehu Seyoum Taffesse)
Rural and Urban Policies Affecting Spatial and Sectoral Linkages Getnet Alemu)
CGE Analysis of the Rural-Urban Transformation (Paul Dorosh and James Thurlow)
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Ethiopia’s Changing Economic Landscape
Structural shift of the economy
Sectoral (declining share of agriculture)
Spatial (urbanization)
A new era for economic development
Infrastructure (expanding road networks)
Electricity generation and use (even exports?!)
Telecommunications (mobile phones and internet)
Education and health
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Structural Transformation
Economic transformation (share of agriculture in total GDP)
Comparisons with other East African countries
Rapid agricultural growth
Industrial growth
Growth linkages and ADLI
Agricultural growth and poverty reduction (CAADP Analysis)
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Production and Real Prices of Major Cereals in Ethiopia, 2000/01 to 2008/09
Source: Dorosh and Ahmed (2009).
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Ethiopia: Economic Structure1999/00 – 2008/09
Source: Calculated from World Bank, World Development Indicators data.
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Economic Transformation in East Africa:Agricultural Share in GDP, 1980s-2000s
Source: Calculated from World Bank, World Development Indicators.
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Economic Transformation in East Africa:Agricultural Share in GDP, 1980-2008
Source: Calculated from World Bank, World Development Indicators data.
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Ethiopia: Industrial Output and Growth1999/00 to 2008/09
Source: Calculated from Ministry of Finance national account statistics.
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Topography within Ethiopia is varied and fragmented within and among regions.
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Annual rainfall varies across space
Rainfall is highest and least variable in the western part of the country and the western slopes of mountains
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Agro-ecological Zones (AEZ’s): “3 Ethiopias” split into 5 AEZs
Source: 2005/06 EDRI Social Accounting Matrix.
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Agricultural Value Added by Agro-Ecological Zone
Zone 2: Rainfall sufficient highlands (cereal – based)
Zone 3: Rainfall sufficient highlands (enset – based) – most of SNNPR
Zone 4: Drought prone
Source: 2005/06 EDRI Social Accounting Matrix.
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Agricultural Growth and Poverty CAADP CGE Baseline Scenario
Agriculture
Land cultivated for each crop follows medium-term trends: total land cultivated increases 2.6% per year, 2009-2015
Land growth varies across region (1.2% per year in rainfall sufficient areas, 3.2% per year in drought-prone areas, 3.7% per year in pastoralist areas)
Crop yield increases account for one-third of the crop production growth
Overall agricultural GDP growth: 4.0%/year
Note: population growth rate is 3.0 percent/year
Non-agricultural output growth based on historical medium-term trends:
Manufacturing: 6.5% per year
Services: 6.7% per year
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Source: Dorosh and Thurlow (2009), ESSP2 Discussion Paper No. 2.

Ethiopia: Impacts of Growth on Poverty
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Source: Dorosh and Thurlow (2009), ESSP2 Discussion Paper No. 2.

Ethiopia’s Spatial Transformation:Urbanization of Population and Economic Activity
Travel times and agglomeration
Urbanization: Ethiopia and East Africa
Ethiopia: City Size
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Agglomeration Index: measuring urban expansion
In order to standardize urbanization measurements, we use methodology developed by Uchida and Nelson (2009):
Urban areas are identified spatially using specific thresholds:
A population density greater than 150 people per km2;
Populations located within 1 hour travel time to a city of at least 50,000 people.
City centers of at least 50,000 people
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Travel Time and Agglomeration Index (Urbanization)
Euclidean Distance (straight line distance) or distance in kilometers may not take into account specific localized biophysical factors
In order to measure travel time to a major city:
Estimation of Travel Times
A series of GIS layers are merged into a ‘friction layer’ which represents the time required to cross each pixel
Road type and class
Paved – all weather
Paved – dry weather
Gravel – all weather
Gravel – dry weather
Earth
Waterbodies
Landcover
Slope
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Ethiopia: Urbanization
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Ethiopia is urbanizing faster than people think!!!

Ethiopia: Alternative Urbanization Estimates
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Urbanization in East Africa2000 to 2005
Source: Calculated from World Bank, World Development Report data.
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Ethiopia: Urban Population by City Size2007/08
Source: World Bank Development Report 2009, World Development Indicators.
Note: Average agglomeration for 2000 is calculated using 2005 population weights.

Ethiopia: Population by City Size
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Population (thousands) by City Size (Cities 20k and greater)

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Road Infrastructure and UrbanizationTravel Time 1984
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Road Infrastructure and Urbanization Travel Time 1994
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Road Infrastructure and Urbanization Travel Time 2007
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Ethiopia: Percent Population connected to Urban Agglomeration
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Source: Schmidt and Kedir (2009)

Urban Expansion: Greater Addis Ababa
Agglomeration Index 1984
In 1984, Addis Ababa and other larger cities were primarily confined to its city administrative boundaries.
There were only a few cities with greater than 50,000 people
Limited road networks and more dispersed population characterized the demographic landscape.
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By 1994, Ethiopia’s cities grew, and the country’s transportation network expanded
Urban corridors formed between Addis Ababa and Nazaret
Shashamene and Awasa also formed an urban network between Oromia and SNNP regions.
Jimma urbanization is also expanding along key road networks
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By 2007, urban linkages were clearly visible throughout Oromia, SNNP, and Amhara regions.
Addis Ababa expanded to connect Sebeta and Bishoftu, and Asela in the South.
Addis Ababa also connected to Ambo in the west, and DebreBerhan in the east
Jimma had grown into a southwestern hub with opportunities to link with Nekemte to the north.
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Population Density and Agglomeration: 1994
(Increasing Urbanization in SNNPR)
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Population Density and Urbanization: 2007
(Increasing Urbanization in SNNPR)
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Ethiopia: Electricity Generation Capacity1958 to 2011*
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Source: Calculated using CSA Survey of Manufacturing (various years) and Ethiopian Electric Power Corporation data.
Notes: Figures for 2008-10 based on additional capacity from Tekeze I (300 Mw) in 2009; and TanaBeles (460 Mw) in 2010. 2011 figures is 2010 figure plus Gile Gibe II (420 Mw) for which the tunnel collapsed in December, 2009.

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Ethiopia: Fixed Line and Cellular Telephones2003 to 2010
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Sources: ITU (2009). Information Society Statistical Profiles 2009 - Africa, International Telecommunication Union (ITU).
Ethiopian Telecommunications Corporation (ETC). ETC Strategic Plan. http://www.ethionet.et/aboutus/visionmission.html

Ethiopia: Fixed Line and Cellular Telephones2003 to 2010
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Sources: ITU (2009). Information Society Statistical Profiles 2009 - Africa, International Telecommunication Union (ITU).
Ethiopian Telecommunications Corporation (ETC). ETC Strategic Plan. http://www.ethionet.et/aboutus/visionmission.html

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Net Primary School Enrollment
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Source: World Bank World Development Indicators.

Ethiopia Food Security Index
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Source: Household Income Consumption Expenditure Survey, and the Demographic and Health Survey from 1999/2000 and 2004/05
*The calculated calorie-based undernutrition for Ethiopia is based on the undernourishment cutoff of 1,990 kilocalories per day
**Proportion of underweight children less than five years of age is calculated as a weight-for-age was less than two standard deviations

Plan of Presentation
Ethiopia’s changing economic landscape
Structural shifts: sectoral and spatial
A brand new world for economic development
Research papers
Rural-Urban Migration in Ethiopia (Valerie Mueller and Tassew Woldehanna)
Trends in Household Expenditure and Welfare (Kibrom Tafere and Alemayehu Seyoum Taffesse)
Rural and Urban Policies Affecting Spatial and Sectoral Linkages Getnet Alemu)
CGE Analysis of the Rural-Urban Transformation (Paul Dorosh and James Thurlow)
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Rural – Urban Migration
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Source: de Brauw et al., (2010).

Rural – Urban Expenditure and WelfarePoverty Incidence
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ERHS: Self-Reported Perceptions of Poverty
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Land Policies and Migration
Regional governments' proclamations restrict access to rural land by prescribing the need to be a rural resident in that particular region as a condition for acquiring rural land free of charge.
No right to transfer land right on sale or in exchange with another property
No easy transferability of land rights: transfer of use right in the form of inheritance and donation is allowed only to the right holder's family members who are residing in the rural kebele and are engaged or wish to engage in agriculture.
These policies inhibit migration from rural areas.
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Implications for Development StrategyCGE Analysis
Implications on accelerated rural-urban migration
Analysis of alternative investments
Large urban centers
Small urban centers
Rural
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Conclusions: Development Strategy
Sectoral allocation of public investments
Agriculture Development Led Industrialization (ADLI) or greater emphasis on urban investment?
Land and Migration Regulations:
Easing of regulations?
Prohibition of sale of land, loss of land rights for those who leave rural areas
Registration requirements for new migrants
Reliable empirical economic analysis can shed light on these issues
Hopefully, these papers will spur this research.
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Rural-Urban Transformation in Ethiopia - Implications for Development Strategies

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Rural-Urban Transformation in Ethiopia - Implications for Development Strategies Presentation Transcript