Latent Advantage, Complex Challenges: Industrial Policy and Chinese Linkages in Ethiopia's Leather Sector

Monday, 9 October, 2017
Abstract: 
Industrial policy is back on the African policy agenda, with a number of countries following new strategies for rapid industrialization. None have done so more eagerly than Ethiopia. In the present paper, published in the China Economic Review, Brautigam, Weis and Tang draw on Justin Yifu Lin's framework of New Structural Economics to assess Ethiopia's industrial policies and engagement in the leather industry. Making use of two rounds of semi-structured interviews (2012 and 2015) with all of the foreign firms and more than a dozen local firms in the leather sector, as well as other key stakeholders, the authors examine seven steps the government took to build the industrial policy: Create a high-level focus on the sector; make strategic use of international development partners; attract a “lead goose” (Chinese)in the foot wear sector; build government capacity to support the sector; strengthen business associations; “shock-to-shape” upgrading; improve input supply. Ultimately, while government interventions have led to improvements across several steps of the value chain, they identify a number of factors that have prevented the country from fully realizing a latent comparative advantage in the leather sector.