The Five Factors
1. Natural Factors
- Increases in the quantity of available land for agriculture increase economic growth.
- It might have negative effects on soil and its quality, contribution to global deforestation.
- The increase in population(labour) applied to fixed quantity of land might cause decrease in marginal productivity.
Deforestation has been one of the biggest concerns that Ethiopia faced, because of soil erosion, malnutrition of soil, loss of wild animal habitats, and decline in biodiversity it causes. 35 % of the Ethiopian land was covered with trees at the beginning of the twentieth century; however, it decreased to 11.9% of the land. Every year, Ethiopia loses about 1410 square kilometers of natural forest. The current Ethiopian Government attempts to prevent deforestation but promote reforestation through education and developing non-forest land. Furthermore, the government used about 2.3 million euros to educate people. The trainees are taught to use proper irrigation to decrease soil erosion, also decreasing the deforestation.
2. Human Factors
- Increase in population = Increase in labour force = Increase in economic growth.
- Increase in population also causes the market demand, stimulating the production.
- If population grows faster than GDP, GDP per Capita falls.
- Improving the skills of labour through education is important in increasing the quality of labour.
GNP per capita of the country was $1541 in 2009, and the life expectancy of men was 52 years, while that of women was 54 years. From the beginning of the 1900s, the Orthodox Church has controlled the education in Ethiopia. School enrollment of Ethiopia is lower than those of most African countries. As a result, a half of the population is illiterate.
3. Population
- Supply of food= Adds the size of infant morality.
- Enviornment = Damaging the environment is necessary to improve the poverty.
- Setting of School age and Working age.
- Birth Rate, Health Care, and Family Planning.
- The role of women in society = Reduce in family sizes.
- Migration = Possibility of decrease in unemployment, underemployment, crime, and poverty.
The population tripled between 1967 and 1975 during Mussolini’s regime. The influx of italians and laborers pushed the growth during the period. Also the migration of working force from rural areas to urban areas caused the second growth. However, the migration decreased the population of workers to grow food. From 1975 to 2000, the urban population has been increasing with the percentage of 8.1%. Ethiopia has only 1 medical doctor per 100000 people. Poor sanitation and malnutrition are the main health problems that Ethiopian government is facing due to lack of educated man power and health facilities. There are only 119 hospitals and 412 health care centers in Ethiopia. 8% of infants die during or after birth.
4. Physical Factors
- Directly productive capital = plant and equipments : factories
- Indirectly productive capital = Facilitating capitals ; roads and railways
- Technological improvements affect the economy largely.
Ethiopia is considered as the “water tower” of Africa, because it has the greatest water reserves. However the country only has few irrigation systems to use it: 1% for power production and 1.5% for irrigation. Ethiopia has 681km of railway, which consists of Addis Ababa – Djibouti Railway. The railway is under the control of both Dijibouti and Ethiopia. As a result of Ethiopia’s 10 year Road Sector Development Program, Ethiopia had 33 297 km of paved roads in 2002. In 1936, Italy supported Ethiopia building infrastructure to connect major cities, and a dam providing water and power.
5. Institutional Factors
-The banking system : Enables the businesses to grow and flourish.
-The educational system : Educate the workforce, increasing the growth.
The government owns the telecommunication services. It is not attractive to the private firms, but because the government is in charge of it, the rural area of Ethiopia also came to have an access on telecommunication system.
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–I think the biggest weakness of Ethiopian economy is its human factors. As you can see above, Ethiopian economy provides a weak education systems. Its enrollment percentage is the lowest compared to other African countries, and almost half the population are illiterate, which slows down the development of the economy. It is expected for the institutional factors and physical factors to promote as the human factors improve: Better educated working force can initiate more reasonable/suitable plans to strengthen the economy.
